Consider the Government's Budget Deficit Function Over a Two-Year Time

question 34

Multiple Choice

Consider the government's budget deficit function over a two-year time span - Years 1 and 2.Suppose in Year 2 there was a lower federal budget deficit than in Year 1.This could be explained by ________ in Year 2.

• A)higher government expenditures (with constant real GDP)
• B)higher real GDP (with constant fiscal policy)
• C)lower real GDP (with constant fiscal policy)
• D)a higher stock of government debt
• E)an upward shift of the budget deficit function

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