If the federal budget is initially balanced and government expenditures remain constant, then a Jdecrease in GDP will

Question

Quizplus · Accepted Answer

A decrease in GDP will likely result in a decrease in tax revenues since individuals and businesses will have lower incomes and profits, respectively, and thus pay less in taxes. If government expenditures remain constant, this decrease in tax revenues will result in a budget deficit.

If the Federal Budget Is Initially Balanced and Government Expenditures