The long-run budget constraint says that:
A) a country will be able to borrow in perpetuity.
B) a country will have to always balance its budget in the short-run.
C) a country's expenditure must equal its production.
D) a country's expenditure can be higher than its production.

Question

Quizplus · Accepted Answer

The long-run budget constraint implies that over time, a country's total expenditures must equal its total production or income. This means that while short-term borrowing is possible, in the long run, a country cannot spend more than it produces.

The Long-Run Budget Constraint Says That