Question : A government budget that includes provisions for an economic downturn is known as:
Option 1: A countercyclical budget
Option 2: A balanced budget
Option 3: A deficit budget
Option 4: A surplus budget
Correct Answer: A countercyclical budget
Solution : The correct answer is (a) A countercyclical budget.
A countercyclical budget refers to a government budget that includes provisions to address and mitigate the impact of an economic downturn or recession. It involves implementing policies and measures that aim to stabilize the economy during periods of contraction and stimulate economic growth.
In a countercyclical budget, the government typically increases spending or reduces taxes during an economic downturn to boost aggregate demand and support economic activity. This approach helps to offset the negative effects of the downturn by providing a fiscal stimulus to the economy. Conversely, during periods of economic expansion, the government may adopt a more conservative approach by reducing spending or increasing taxes to prevent overheating and inflation.
The purpose of a countercyclical budget is to promote economic stability and mitigate the adverse effects of economic fluctuations on employment, income, and overall economic well-being.
Question : The difference between a government's total revenue and total expenditure is known as:
Option 1: National income
Option 2: Fiscal deficit
Option 3: Trade deficit
Option 4: Budget surplus
Question : The difference between total government expenditures and total government revenues is known as:
Option 1: The budget deficit
Option 2: The budget surplus
Option 3: The national debt
Option 4: The trade deficit
Question : When a government borrows money to finance its expenditures, it is known as:
Option 1: Deficit financing
Option 2: Balanced budget financing
Option 3: Surplus financing
Option 4: None of the above
Question : A government budget deficit occurs when:
Option 1: Revenues exceed expenditures
Option 2: Expenditures exceed revenues
Option 3: The budget is balanced
Option 4: There are no revenues or expenditures
Question : What is the difference between a balanced budget and a deficit budget?
Option 1: A balanced budget spends as much as it earns, while a deficit budget spends more than it earns
Option 2: A balanced budget earns as much as it spends, while a deficit budget spends more than it earns
Option 3: A balanced budget spends more than it earns, while a deficit budget earns more than it spends
Option 4: A balanced budget earns more than it spends, while a deficit budget spends as much as it earns
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile