The diagram below shows two budget deficit functions for a hypothetical economy.
FIGURE 32- 2
-Refer to Figure 32- 2. Initially, suppose that real GDP is $100 million and the budget deficit is $14 million, as shown by point A. Which of the following events could result in a move from point A to point B?

Question

The diagram below shows two budget deficit functions for a hypothetical economy.
  FIGURE 32- 2
-Refer to Figure 32- 2. Initially, suppose that real GDP is $100 million and the budget deficit is $14 million, as shown by point A. Which of the following events could result in a move from point A to point B?

Quizplus · Accepted Answer

A move from point A to point B would require a decrease in the budget deficit. The only option that would result in a decrease in the budget deficit is the implementation of a contractionary fiscal policy, which would involve a reduction in government spending or an increase in taxes. Therefore, option D is the correct choice.

The Diagram Below Shows Two Budget Deficit Functions for a Hypothetical