If the federal budget is initially balanced and government expenditures remain constant, then an increase in GDP will _________ tax revenues and create a budget _________.
A) increase tax revenues and create a budget surplus.
B) increase tax revenues and create a budget deficit.
C) decrease tax revenues and create a budget surplus.
D) decrease tax revenues and create a budget deficit.
Ans: A) increase tax revenues and create a budget surplus.
You might also like to view...
Which of the following statements explains why monopolies weaken the functioning of the invisible hand?
A) A monopoly is a price taker. B) The quantity produced by a monopoly is too low. C) Monopolies face an upward sloping demand curve. D) A monopoly sets the price of its good below marginal costs.
If Treasury deposits at the Fed are predicted to increase, the manager of the trading desk at the New York Fed bank will likely conduct ________ open market operations to ________ reserves
A) defensive; inject B) defensive; drain C) dynamic; inject D) dynamic; drain