The Diagram Below Shows the Budget Deficit Function for a Government

question 54

Multiple Choice

The diagram below shows the budget deficit function for a government in a hypothetical economy. FIGURE 31-1
-Refer to Figure 31-1.Initially,suppose real GDP is $100 million and the budget deficit is $4 million,as shown by point A.If the government implements an expansionary fiscal policy by decreasing lump-sum taxes,then

• A)the budget deficit function would shift up.
• B)the budget deficit function would shift down.
• C)the budget deficit function would become steeper.
• D)the budget deficit function would become flatter.
• E)the size of the budget deficit would decrease as we move from point A to point B.

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Definitions:

Fiedler's Contingency Model

A leadership theory proposing that effective group performance depends on the proper match between a leader's style of interacting with subordinates and the degree to which the situation gives control and influence to the leader.

Least-preferred Co-worker

The least-preferred co-worker is a term from Fiedler's contingency theory, referring to the person a leader has least preferred to work with, used to measure the leader's task or relationship orientation.

Leadership Style

The approach and manner in which a leader directs, motivates, guides, and manages groups of people, influencing how they achieve objectives and shape organizational culture.

Fiedler's Contingency Model

A theory proposing that effective leadership depends on the situational context and the match between the leader’s style and specific situational variables.