There are several important philosophies regarding budget balances. One way in which they differ is in terms of the time span over which the budget should be balanced. Another difference among budget philosophies involves whether the budget balance is as important as other economic goals. Which of the following budget philosophies advocates ensuring that the economy reaches its potential output? a. Cyclically balanced budgetb. Annually balanced budgetc. Functional financeA major problem with the implementation of this philosophy is that it:a. Relies upon government officials to budget for surpluses during boom times in order to cover deficits during recessionsb. Magnifies business cycle fluctuationsc. Can allow the national debt to burgeon with chronic deficits

Question

Business

Brie

22 November, 19:32

There are several important philosophies regarding budget balances. One way in which they differ is in terms of the time span over which the budget should be balanced. Another difference among budget philosophies involves whether the budget balance is as important as other economic goals. Which of the following budget philosophies advocates ensuring that the economy reaches its potential output? a. Cyclically balanced budgetb. Annually balanced budgetc. Functional financeA major problem with the implementation of this philosophy is that it:a. Relies upon government officials to budget for surpluses during boom times in order to cover deficits during recessionsb. Magnifies business cycle fluctuationsc. Can allow the national debt to burgeon with chronic deficits

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Mirabel · Answer 1

1. C) Functional finance

2. B) Magnifies business cycle fluctuations.

Explanation:

1) Which of the following budget philosophies advocates ensuring that the economy reaches its potential output?.

It is because the philosophy of functional finance is based on principles of effective demand. Therefore, it ensures that economy would reach potential output.

2) A major problem with the implementation of this philosophy is that it:

It is because it does not allow the government's fiscal policy as per the fluctuations that are going on in the economy.