Suppose That the Federal Budget Is Balanced When GDP Is

question 114

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)government receipts from social security premiums will be falling.
• E)All of the above are correct.

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Definitions:

Pension Plan

A retirement plan funded by employers or employees, or both, paying out a fixed sum to retirees, often based on salary and years of service.

AGI

Short for Adjusted Gross Income; it is your gross income after adjustments and deductions, crucial for tax calculations.

Deductible IRA Contribution

A contribution to an Individual Retirement Account that can be subtracted from gross income, reducing taxable income.

Pension Plan

A retirement savings plan provided by an employer which guarantees a specified income to the employee upon retirement.