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Suppose the Government Decided to Ensure That Its Structural Budget

Question 123

Multiple Choice

Suppose the government decided to ensure that its structural budget deficit was always zero.This policy would be problematic because


A) it would act as a built-in destabilizer.
B) it would entail a rising debt-to-GDP ratio.
C) it would tend to mean that net exports would be crowded out.
D) it would require continual fiscal expansion.
E) it would require continual fiscal contraction.

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