Suppose the government's budget deficit falls from one year to the next,but there has been no change in the government's fiscal policy.The change in the budget deficit can be explained by

Question

Quizplus · Accepted Answer

A fall in the budget deficit can be explained by an increase in tax revenues or a decrease in government spending. If there has been no change in fiscal policy, it is likely that the fall in the budget deficit is due to an increase in real GDP, as this would increase tax revenues while keeping government spending constant.

Suppose the Government's Budget Deficit Falls from One Year to the Next,but