The policy of running deficits and only gradually increasing taxes later to service the debt is referred to as
A) crowding out.
B) tax-smoothing.
C) generational accounting.
D) Ricardian equivalence.

Question

Quizplus · Accepted Answer

This policy is known as tax-smoothing, which involves running deficits during times of economic weakness, and gradually raising taxes during times of economic growth to pay down the debt. This approach helps to stabilize the economy by avoiding large, abrupt swings in fiscal policy.

The Policy of Running Deficits and Only Gradually Increasing Taxes