A rule of thumb is that a 1% increase in output leads automatically to a reduction in the deficit of what percentage of GDP?
A)0.5%
B)1%
C)1.5%
D)2%

Name: A rule of thumb is that a 1% increase in output leads automatically to a reduction in the deficit of what percentage of GDP? A)0.5% B)1% C)1.5% D)2%
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Question

Quizplus · Accepted Answer

A 1% increase in output (GDP) typically leads to a reduction in the deficit by about 0.5% of GDP, due to higher tax revenues and lower government spending on welfare programs as the economy improves.

A Rule of Thumb Is That a 1% Increase in Output