The Diagram Below Shows the Budget Deficit Function for a Government

question 84

Multiple Choice

The diagram below shows the budget deficit function for a government in a hypothetical economy. FIGURE 31-1
-Refer to Figure 31-1.Initially,suppose real GDP is $100 million and the budget deficit is $4 million,as shown by point A.If the government implements a contractionary fiscal policy by decreasing its purchases of goods and services,then

• A)the budget deficit function would shift up.
• B)the budget deficit function would shift down.
• C)the budget deficit function would become steeper.
• D)the budget deficit function would become flatter.
• E)the size of the budget deficit would decrease as we move from point A to point B.

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Definitions:

Beginning Inventory

The value of all the inventory that a company has at the start of an accounting period before any purchases or sales are made.

Inventory Turnover

An indicator that measures the frequency at which a company's inventory cycles through sales and restocking within a given period.

Sales

The transactions involving the exchange of goods or services for money, reflecting a key revenue source for businesses.

Beginning Inventory

The financial value of stock ready for market at the beginning of a bookkeeping period.