Starting from a Balanced Budget,which of the Following Would NOT

question 71

Multiple Choice

Starting from a balanced budget,which of the following would NOT cause a government budget deficit?

• A)A decrease in taxes
• B)An increase in spending of goods and services
• C)An increase in transfer payments
• D)A 50 percent increase in spending accompanied by a 50 percent increase in taxes

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Definitions:

Relative Prices

The price of a good or service compared to the price of another, indicating the trade-off between choosing one over the other.

Demand for Loanable Funds

The desire for borrowing money that exists among individuals, businesses, and governments in an economy, usually influenced by interest rates.

Interest Rate

The cost, in terms of a percentage of the principal, levied by a lender on a borrower for asset usage.

Supply of Loanable Funds

The supply of loanable funds is the total amount of capital available for borrowers to secure, typically originating from savings in the economy, and forming the basis for interest rates determination.