Suppose Policy Makers Pass a Budget That Results in a Reduction

question 251

Multiple Choice

Suppose policy makers pass a budget that results in a reduction in government spending and no change in taxes. This reduction in government spending will likely

• A) increase government borrowing and increase interest rates.
• B) generate extra tax revenues to cover the extra spending.
• C) reduce interest rates and increase planned investment.
• D) reduce interest rates, increase in planned investment, and increase real GDP.

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Definitions:

Quite

A word expressing a degree of agreement or the extent of an adjective or adverb; often used to modify statements.

Passed

Could refer to having been approved in a test or examination, or signifies someone or something that has moved beyond a certain point.

They're

A contraction of "they are," used to refer to two or more people, animals, or things.

Effected

Refers to something that has been brought about or achieved; an outcome that has been realized.