If for Every Dollar Increase in Farm Subsidies the Government

question 43

Multiple Choice

If for every dollar increase in farm subsidies the government decreased urban welfare payments by a dollar,we would expect the net effect to be

• A)an increase in the budget deficit because government spending has increased
• B)a decrease in the budget deficit because transfer payments are not included in the government's budget
• C)an increase in the budget deficit because transfer payments have increased
• D)an increase in the budget deficit because farm subsidies are transfer payments but urban welfare payments are not
• E)no change in the budget deficit