Practice question · Match the pairs
Match each fiscal concept to its definition.
- Budget deficit
- Public debt
- Crowding out
- Automatic stabilizer
- Accumulated deficits over time
- Public borrowing displacing private investment
- Spending exceeding revenue in a year
- Built-in cushioning that needs no vote
Hints
- Separate the yearly flow from the accumulated stock.
- One force works against fiscal action, the other reinforces it.
Show the answer
- Budget deficit → Spending exceeding revenue in a year
- Public debt → Accumulated deficits over time
- Crowding out → Public borrowing displacing private investment
- Automatic stabilizer → Built-in cushioning that needs no vote
Why
Flow (deficit) versus stock (debt), plus the two forces — one hostile, one helpful — that ride along with fiscal action.
Practise Fiscal Policy
The app has 7 more questions on this lesson, and keeps your place in the course. Business I is free to start.
More questions on Fiscal Policy
- Why might a large debt-financed stimulus partially _undermine itself_?
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- Which are genuine limitations of discretionary fiscal policy?
- The spending multiplier is larger when the marginal propensity to consume is higher. Why does that make the…
- A country running a budget deficit must see its public debt rise as a share of GDP.
- Sort each stabilizing force: automatic stabilizer or discretionary measure?