Consider the government's budget deficit function over a two-year time span - Years 1 and 2.Suppose in Year 2 there was a lower federal budget deficit than in Year 1.This could be explained by ________ in Year 2.

Question

Quizplus · Accepted Answer

When real GDP increases while fiscal policy remains constant, tax revenue will increase while government spending remains the same, which leads to a lower budget deficit.

Consider the Government's Budget Deficit Function Over a Two-Year Time