If a Government Has a Budget Deficit, It Must

question 22

Multiple Choice

If a government has a budget deficit, it must

• A) increase taxes.
• B) decrease taxes.
• C) decrease its expenditures.
• D) lower the real interest rate.
• E) borrow in the loanable funds market.

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Definitions:

Marginal Revenue

The rise in income generated by selling an additional unit of a product or service.

Marginal Revenue

The rise in income generated by selling one more unit of a product or service.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, reflecting consumers' sensitivity to price changes.