2) What is a country’s fiscal deficit and why might faster growth shrink it?
A country’s fiscal deficit is the amount by which ____________. Faster growth might shrink the fiscal deficit if ____________.
Wrong! - A country’s fiscal deficit is its government budget deficit. How is the government budget balance determined? When is the government budget in a deficit? How can changes in the items that make up the government budget shrink the government budget deficit?
Good Job! - A country’s fiscal deficit is its government budget deficit. The government has a budget deficit when its outlays exceed receipts. If faster growth increases receipts at a faster pace than outlays increase, then faster growth shrinks the fiscal deficit.
