If the federal budget is initially balanced and government expenditures remain constant, then an Jincrease in GDP will _________ tax revenues and create a budget _________.

Question

Quizplus · Accepted Answer

An increase in GDP typically leads to higher tax revenues because individuals and businesses earn more income and profits, which are taxed. If government expenditures remain constant, the increase in tax revenues will result in a budget surplus.

If the Federal Budget Is Initially Balanced and Government Expenditures