Assume That the Government Is Currently Balancing the National Budget

question 94

Multiple Choice

Assume that the government is currently balancing the national budget so that outlays equal tax revenue.Then the economy slips into recession,and the government decides to increase government spending by $50 billion.The government must pay for this by borrowing; it must sell $50 billion worth of Treasury bonds.As a result,the federal budget will

• A) be in deficit by less than $50 billion.
• B) be in surplus by at least $50 billion.
• C) remain balanced.
• D) be in surplus by $50 billion.
• E) be in deficit by at least $50 billion.

---

Definitions:

Learning Curve

A learning curve illustrates the rate of improvement in performing a task or the increase in efficiency achieved by repetition of a process or activity.

Cumulative Number

A total that increases over time by adding successive amounts or quantities, often used in data collection and analysis.

Labor Per Unit

Refers to the amount of labor required to produce a single unit of a product, indicating efficiency and productivity levels.

Long-run Average Cost Curve

A curve that shows the lowest cost at which a firm can produce any given level of output in the long run, when all inputs are variable.