Consider the Government's Budget Deficit Function

question 117

Multiple Choice

Consider the government's budget deficit function.With an unchanged fiscal policy by government,an increase in GDP tends to ________ net tax revenues and thus ________ the budget deficit.

• A)raise; raise
• B)raise; lower
• C)lower; raise
• D)lower; lower
• E)lower; leave unchanged

---

Definitions:

Outward-Oriented Policies

Economic policies aimed at promoting international trade and investment, as opposed to inward-looking strategies focusing on domestic markets.

Productivity

The efficiency at which individuals, companies, or economies produce goods and services, usually measured as output per unit of input.

Economic Growth

An increase in the amount of goods and services produced in an economy over a period of time.

Investment

Investment refers to the allocation of resources, usually financial, in order to generate income or profit, including the purchase of assets with the expectation that it will generate payoff in the future.