Question : A government budget that is balanced over the long term is called:
Option 1: A stable budget
Option 2: A dynamic budget
Option 3: A cyclically balanced budget
Option 4: None of the above
Correct Answer: A cyclically balanced budget
Solution : The correct answer is (c) A cyclically balanced budget
A government budget that is balanced over the long term is called a cyclically balanced budget. It means that the budget is balanced over the course of an economic cycle, taking into account fluctuations in revenue and expenditure that occur due to changes in economic conditions. During periods of economic expansion, when tax revenues tend to be higher, the budget may have a surplus. Conversely, during periods of economic downturn, when tax revenues may be lower, the budget may have a deficit. The goal is to achieve balance over the entire economic cycle.
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