If the Cyclically Adjusted Budget Deficit Increases from $200 Billion

question 50

Multiple Choice

If the cyclically adjusted budget deficit increases from $200 billion to $250 billion and GDP remains constant over the two years:

• A)fiscal policy is expansionary.
• B)fiscal policy is contractionary.
• C)fiscal policy is neutral.
• D)the tax system is progressive.

Calculate changes in consumer surplus due to shifts in price.

Identify the effects of market equilibrium changes on consumer and producer surplus.

Understand and analyze the relationship between supply, demand, and total surplus.

Interpret the impact of demand and supply shifts on total surplus.

---

Definitions:

Competitive Price-searcher

A market condition where firms have some control over pricing because their products are differentiated, but they must still consider competitors' prices in their pricing strategy.

Retail Selling

The process of selling goods or services directly to consumers through various channels, such as stores, online platforms, or by phone.

Product Differentiation

The practice of distinguishing a product or service from others, to make it more attractive to a particular target market.

Demand Curves

Graphical representations showing the relationship between the price of a good and the quantity demanded by consumers.