The Diagram Below Shows Two Budget Deficit Functions for a Hypothetical

question 47

Multiple Choice

The diagram below shows two budget deficit functions for a hypothetical economy. FIGURE 31-2 Refer to Figure 31-2.Initially,suppose real GDP is $100 million and the budget deficit is $14 million,as shown by point A.Which of the following events could result in a move from point A to point C?

• A)a fiscal expansion and an increase in GDP
• B)a fiscal contraction and an increase in GDP
• C)a fiscal expansion and a decrease in GDP
• D)a fiscal contraction and a decrease in GDP
• E)an increase in GDP with no change in fiscal policy

---

Definitions:

Work

An activity involving mental or physical effort done in order to achieve a purpose or result, often associated with a profession or job.

Post-Technological

Referring to a conceptual future or theoretical state beyond current technological advancements and dependencies.

Secondary Sector

The portion of an economy that is concerned with the processing of raw materials obtained by the primary sector into goods and products.

Economy

The system of production, consumption, and distribution of goods and services within a particular geographic region.