The Diagram Below Shows Two Budget Deficit Functions for a Hypothetical

question 40

Multiple Choice

The diagram below shows two budget deficit functions for a hypothetical economy.
FIGURE 32- 2
-Refer to Figure 32- 2. Initially, suppose that 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 contraction and an increase in GDP
• B)a fiscal expansion and a decrease in GDP
• C)a fiscal contraction and a decrease in GDP
• D)an increase in GDP with no change in fiscal policy
• E)a fiscal expansion and an increase in GDP

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Definitions:

Gasoline Prices

The cost per unit volume of gasoline, typically influenced by supply and demand factors, taxation, and global oil prices.

Exponential Distribution

Exponential Distribution is a statistical distribution used to model the time between events in a Poisson process, describing phenomena such as the time until a radioactive particle decays.

Expected Value

The anticipated value for a given investment or decision in probabilistic terms, calculated as the weighted average of all possible values.

Continuous Probability Distributions

Mathematical functions that describe the likelihood of any value within a continuous range occurring in a random variable.