The excess of total government spending above the national income (i.e. fiscal deficit) is known as:
A. Inflationary gap
B. Deflationary gap
C. Fiscal Deficit
D. None of the above
Answer:B
The excess of total government spending above the national income (i.e. fiscal deficit) is known as:
A. Inflationary gap B. Deflationary gap C. Fiscal Deficit D. None of the above
Explanation: The shortfall in total spending of the government (i.e. fiscal surplus) over the national income creates deflationary gap in the economy.