What Is the Result of Using Balanced-Budget Fiscal Policy When

question 8

Multiple Choice

What is the result of using balanced-budget fiscal policy when both a recessionary gap and a budget deficit exist?

• A)The recessionary gap would be reduced and the budget deficit would fall.
• B)The recessionary gap would increase and the budget deficit would fall.
• C)The recessionary gap would be reduced and the budget deficit would rise.
• D)The recessionary gap would increase and the budget deficit would rise.

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Definitions:

Differential Analysis

A decision-making technique that focuses on the cost and revenue differences between alternative business decisions.

Relevant Costs

Costs that are directly associated with a specific decision and will change based on the outcome of that decision.

Alternatives

Different options or strategies that can be considered or chosen in decision-making processes.

Quantitative Terms

Conditions or parameters that can be measured and quantified, often used in contracts and agreements.