If the Federal Budget Is Initially Balanced and Government Expenditures

question 105

Multiple Choice

If the federal budget is initially balanced and government expenditures remain constant, then an Jincrease in GDP will _________ tax revenues and create a budget _________.

• A) increase tax revenues and create a budget surplus.
• B) increase tax revenues and create a budget deficit.
• C) decrease tax revenues and create a budget surplus.
• D) decrease tax revenues and create a budget deficit.