Consider the government's intertemporal budget constraint:
Term A is __________,and term B is __________.

Question

Consider the government's intertemporal budget constraint: 
Term A is __________,and term B is __________.

Quizplus · Accepted Answer

The intertemporal budget constraint represents the government's ability to balance its spending and taxes over time. Term A is the present value of government spending, which represents the total amount of spending the government plans to undertake in the future. Term B is the initial debt, which represents the amount of money the government has already borrowed and must repay in the future. By comparing the present value of future spending to the initial debt, the government can determine whether it is on track to balance its budget over the long term.

Consider the Government's Intertemporal Budget Constraint