Long–Run Consequences of Stabilization Policies

Depressed aggregate demand leading potentially to recession.

Balanced government budgets due to controlled spending.

Strengthened domestic currency promoting cheaper imports.

Increased competitiveness abroad from predictable pricing.

Savings rate

Inflation rate

Trade deficit

Budget surplus

A budget deficit is when tax revenues exceed government spending, while a budget surplus is when government spending exceeds tax revenues

A budget deficit and a budget surplus both represent a situation where government spending exceeds tax revenues

A budget deficit and a budget surplus both represent a situation where tax revenues exceed government spending

A budget deficit is when government spending exceeds tax revenues, while a budget surplus is when tax revenues exceed government spending

Multiplier effect.

Crowding out effect.

Absolute advantage.

Comparative advantage.

The budget surplus offsets the national debt.

The national debt increases.

The national debt decreases.

The national debt remains unchanged.

The national debt and a budget deficit both represent the total amount of money that a country's government has borrowed

The national debt is the shortfall in a single fiscal year's budget, while a budget deficit is the total amount of money that a country's government has borrowed

The national debt is the total amount of money that a country's government has borrowed, while a budget deficit is a shortfall in a single fiscal year's budget

The national debt and a budget deficit both represent the shortfall in a single fiscal year's budget

It always results in increased government spending

It has no impact on future taxes

It can lead to higher future taxes

It always leads to lower future taxes

National debt

Budget deficit

Fiscal policy

Trade balance

It can lead to increased national debt

It always results in a budget surplus

It has no impact on the national debt

It always reduces the national debt

It increases

It fluctuates based on inflation rates only

It decreases

It stays the same