The government has to go into debt to meet the needs of the budget deficit or shortfall. Identify whether this statement is true or false. Select one: True False
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The government has to go into debt to meet the needs of the budget deficit or shortfall. Identify whether this statement is true or false.
Select one:
True
False
Step by step
Solved in 2 steps
- Explain why the Public-Choice view supports the deficit budget rule by using one of the voter’s behavior hypotheses to support your answerWhat is a federal budget deficit or surplus? How does this affectinterest rates?Suppose the economy is in a recession and the government is running a budget surplus. This implies the government is running a __________ and decreasing its __________. structural surplus; net debt structural deficit; net debt structural deficit; net asset structural surplus; net asset balanced budget; net asset
- Suppose your local government decide to tax the interest income on its own bonds as part of an effort to rectify serious budgetary woes. What would you expect to see happen to the yields on these bondsExplain how the bond market facilitate government (fiscal) policies. How do you think the bond market could discipline a government & discourage the government from borrowing (& spending) excessively?If you want to cut taxes and deficits, just what programs are you prepared to cut?
- You are the controller of a firm whose CEO believes that debt should always be used to finance long-term expenditures because interest is tax deductible. List and describe other benefits to debt financing. Also, list and describe risks to using debt.Brieftly discuss two important methods and the resulting consequences of financing deficit budgets.How can a federal budget deficit increase market equilibrium interest rates and reduce private investment and future economic growth?