In 1981,U.S.policy makers predicted a balanced budget as:
A)the budget included a decrease in defense expenditures.
B)the budget included an increase in the tax rate.
C)the budget included an increase in unspecified government spending.
D)the growth in GDP was expected to be large enough to lead to an increase in tax revenues despite the tax cut.
E)the growth in GDP was expected to be small enough to require less government spending.

Question

Quizplus · Accepted Answer

The prediction of a balanced budget in 1981 was based on the expectation that the growth in GDP would be large enough to lead to an increase in tax revenues despite the tax cut. This means that the government did not have to increase taxes or decrease spending, but still expected to balance the budget due to the increase in tax revenues from a growing economy.

In 1981,U.S.policy Makers Predicted a Balanced Budget As