Read the two statements and choose the correct option.
I. A fiscal deficit used to build roads and ports may raise the economy's future output.
II. Every fiscal deficit is harmful, whatever it is spent on.

Only ICorrect answerYour answerOnly IICorrect answerYour answerBoth I and IICorrect answerYour answerNeither I nor IICorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Borrowing for productive assets can pay for itself through higher output and revenue. I is true.
Whether a deficit harms depends on its use and the state of the economy. II is false.

Ten questions from Budget Deficits, at your own pace.

Read the two statements and choose the correct option.I. A fiscal deficit used to build roads and ports may raise the economy's future output.II. Every fiscal deficit is harmful, whatever it is spent on.