Refer to the Diagram, Where T Is Tax Revenues and G

question 200

Multiple Choice

Refer to the diagram, where T is tax revenues and G is government expenditures. All figures are in billions of dollars. If the full-employment and actual GDP are each $400 billion, government can balance
Its cyclically adjusted budget by

• A) increasing T by $40 billion.
• B) reducing G by $20 billion.
• C) reducing T by $20 billion.
• D) increasing T by $10 billion and reducing G by $20 billion.

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