The budget deficit function is graphed with the budget deficit on the vertical axis and ________ on the horizontal axis,and is ________.

Question

Quizplus · Accepted Answer

The budget deficit is typically measured as a percentage of GDP, so it makes sense to graph it with real GDP on the horizontal axis. As the economy grows (i.e. real GDP increases), tax revenues increase and government expenditures may decrease, leading to a smaller budget deficit. Therefore, the budget deficit function is downward sloping.

The Budget Deficit Function Is Graphed with the Budget Deficit