Explain spending caps set by the Budget Enforcement Act
What will be an ideal response?
The Budget Enforcement Act imposed constrains on spending. These constraints, called spending caps, were set on discretionary spending for the following five years. These caps were set in such a way as to require small but steady decrease in discretionary spending (in real terms). Explicit provisions were made for emergencies.
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A decrease in the supply of steel results in a shortage of steel at the original equilibrium price. Explain how market forces will act to eliminate the shortage
What will be an ideal response?
If an economy is producing at a point on the production possibilities curve it represents: a. full employment of existing resources. b. the gains from trade that an economy can enjoy
c. the maximum amount of two goods that can be produced with existing resources. d. decreasing opportunity costs of producing both goods. e. overutilization of existing resources.