If the preferred bank stock acquired by the U.S. government through the TARP program is valued using a capital budgeting approach, then the government budget deficit in the year in which the stocks is acquired will be than if a current budget approach were employed.
A)larger
B)smaller
C)no different
D)more cyclical

Question

Quizplus · Accepted Answer

Using a capital budgeting approach means that the acquisition cost of the preferred bank stock will be capitalized as an asset on the government's balance sheet and then depreciated over time. This will result in a smaller immediate impact on the government's budget deficit compared to a current budget approach, which would expense the cost of the acquisition in the current year and lead to a larger deficit.

If the Preferred Bank Stock Acquired by the U