Explain in words what is meant by the prudent fiscal policy rule. What is the main reason for 'tax smoothing'? Under this rule, how should a government react in the following scenarios:

(a) Defence spending is cut for the foreseeable future due to the end of the Cold War.

(b) The government compensates farmers following a disease outbreak.

(c) The Treasury releases a report forecasting that the cost of the tax-funded health service will treble within twenty years.

(d) The government decides to contribute troops to a war that it expects to be over in a matter of weeks.