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Budget Deficits · Question 48 of 51

Question 48

MediumOriginal question

Read the two statements and choose the correct option.

I. A fiscal deficit means the government has no debt.

II. A fiscal deficit always causes prices to fall.

Options for question 48

Show the answer and explanation
CorrectNot quiteAnswer D

Correct answer: D

Explanation

  1. A deficit is borrowing, which adds to debt. I is false.

  2. Deficit spending adds to demand; if anything it pushes prices up. II is false.

Concept
Misreading deficits
Typical time
70 s
Your time
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The rule this testsWhat deficits do
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