The Two-Period Budget Constraint Tells Us

question 115

Multiple Choice

The two-period budget constraint tells us:

• A) a creditor country can afford future deficits "on average."
• B) a creditor country cannot afford future deficits "on average."
• C) a debtor country cannot afford future deficits "on average."
• D) a debtor country can afford future deficits "on average."

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Definitions:

Congestion

A state of overcrowding in a space or area, often leading to traffic jams, delayed services, or inefficiency.

Logrolling

A practice in politics where legislators exchange support or votes on issues of mutual interest, often without considering the issues' merit.

Economic Efficiency

An optimal distribution of resources in an economy, where no one can be made better off without making someone else worse off.

Marginal Cost

Marginal cost is the cost incurred by producing one additional unit of a good or service, reflecting changes in variable cost.