Suppose That the Federal Budget Is Balanced When GDP Is

question 17

Multiple Choice

Suppose that the federal budget is balanced when GDP is at potential GDP.If equilibrium GDP falls below potential

• A)this will result in a current budget deficit.
• B)the cyclically adjusted budget will be balanced.
• C)government transfer payments will be rising and tax receipts will be falling.
• D)All of the above are correct.

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Definitions:

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