Budgeting and Tax Policy

A deficit is ________.

  1. the overall amount owed by government for past borrowing
  2. the annual budget shortfall between revenues and expenditures
  3. the cancellation of an entitlement program
  4. all the above

Hint:

B

Entitlement (or mandatory) spending is ________.

  1. formula-based spending that goes to individual citizens
  2. a program of contracts to aerospace companies
  3. focused on children
  4. concentrated on education

When times are tough economically, what can the government do to get the economy moving again?

Hint:

A Keynesian approach would recommend deficit spending to stimulate the economy. Supply-side economists would advocate cutting taxes to get more money flowing in the economy.