If a Government Has a Budget Deficit, It Must

question 39

Multiple Choice

If a government has a budget deficit, it must

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

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Definitions:

Horizontal Analysis

Amounts of items compared on the same line of comparative financial reports. Horizontal analysis can also be in the form of a trend analysis.

Trend Percentage

A financial analysis tool that shows how a financial statement item changes over time, often used to spot patterns or trends.

Sales

The total amount of goods or services sold by a company during a specific time period, generating revenue.