-Economic data for a mythical economy in the years 2006 -2010 are summarized in the figure above. Assume that the spending formulas and tax schedules are identical for all years. When the economy is above full employment, the government has a
A) procyclical policy.
B) balanced budget.
C) budget surplus.
D) budget deficit.

Question

-Economic data for a mythical economy in the years 2006 -2010 are summarized in the figure above. Assume that the spending formulas and tax schedules are identical for all years. When the economy is above full employment, the government has a
A) procyclical policy. 
B) balanced budget. 
C) budget surplus. 
D) budget deficit.

Quizplus · Accepted Answer

When the economy is above full employment, it typically generates more tax revenue and requires less government spending on welfare programs, leading to a budget surplus.

-Economic Data for a Mythical Economy in the Years 2006