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The functional finance approach prioritizes economic growth and stability over balancing the budget.
False. According to the functional finance approach, providing jobs, achieving price stability, and promoting economic growth are considered more important than balancing the budget. This approach suggests that government spending should be based on the needs of the economy rather than aiming for a balanced budget at all times.
The functional finance approach emphasizes the use of fiscal policy, like government spending and taxation, to achieve full employment and stabilize prices, even if it results in budget deficits. The focus is on managing the economy to ensure overall prosperity rather than strict budget balancing.
For example, during economic downturns, the government may increase spending to create jobs and stimulate economic activity, even if it leads to a temporary budget deficit. This approach prioritizes the well-being of the economy and the population over a rigid focus on budget balance.
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