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A Government Budget Deficit

Question 23

Multiple Choice

A government budget deficit


A) is more inflationary when financed by higher tax rates.
B) is generally considered undesirable in the Keynesian view of economic policy.
C) can never occur when the structural deficit is zero.
D) that is financed by creating new money draws funds that might otherwise have been spent on consumption and investment.
E) could result from recession-induced decreases in tax revenues rather than from increases in government spending.

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