What is the outcome if spending by the federal government exceeds revenue?
A) The price level tends to fall.
B) The aggregate demand curve shifts leftward.
C) The aggregate supply curve shifts rightward.
D) A federal budget deficit occurs.

Question

What is the outcome if spending by the federal government exceeds revenue?  
A) The price level tends to fall. 
B) The aggregate demand curve shifts leftward. 
C) The aggregate supply curve shifts rightward. 
D) A federal budget deficit occurs.

Quizplus · Accepted Answer

If spending by the federal government exceeds revenue, it means that there is a shortfall in the government's finances. This results in a federal budget deficit, which is the amount by which spending exceeds revenue in a given year. This deficit can have various impacts on the economy, such as increasing the national debt, reducing investment, and crowding out private investment.

What Is the Outcome If Spending by the Federal Government