If There Is Initially a Federal Budget Deficit, and Government

question 65

Multiple Choice

If there is initially a federal budget deficit, and government purchases and transfer payments both fall:

• A)there is an indeterminate effect on both AD and the budget deficit.
• B)AD increases and the budget deficit increases.
• C)AD increases and the budget deficit decreases.
• D)AD decreases and the budget deficit increases.
• E)AD decreases and the budget deficit decreases.

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