Consider the budget deficit function, graphed with the budget deficit on the vertical axis and real GDP on the horizontal axis. The vertical position (or height)of the budget deficit function is determined by

Question

Quizplus · Accepted Answer

The vertical position (or height) of the budget deficit function is determined by the government's fiscal policies, including its spending and taxation decisions. Therefore, choice D is the correct answer. The other options do not accurately describe the determinants of the budget deficit function.

Consider the Budget Deficit Function, Graphed with the Budget Deficit