Explain what a PAYGO rule is
What will be an ideal response?
A PAYGO rule requires that any newly proposed government program will have no effect on either the current or future budget deficits. This implies that proponents of a new program must either propose tax increases to pay for the program or cuts in other programs.
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The expansion path for a constant-returns-to-scale production function
a. is a straight line through the origin with a slope greater than 1 if w > v. b. is a straight line through the origin with a slope greater than 1 if w < v. c. is a straight line through the origin, though its slope cannot be determined by w and v alone. d. has a positive slope but is not necessarily a straight line.
A decrease in the discount rate ________ bank reserves and ________ the money supply if banks respond appropriately to the change in the rate
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases