If There Is Initially a Federal Budget Deficit, and Taxes

question 16

Multiple Choice

If there is initially a federal budget deficit, and taxes fall while transfer payments rise:

• 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.

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Definitions:

Mortgage Payment

A regular payment made towards a mortgage loan, typically including both principal and interest components.

Apothem

A line segment that goes through the center of a polygon that is perpendicular to a side.

Octagon

A geometric figure with eight sides and eight angles.

Gazebo

A freestanding open structure, often found in gardens and parks, used for relaxation or entertainment.