Starting from a balanced budget,which of the following would NOT cause a government budget deficit?
A)A decrease in taxes
B)An increase in spending of goods and services
C)An increase in transfer payments
D)A 50 percent increase in spending accompanied by a 50 percent increase in taxes

Question

Quizplus · Accepted Answer

A 50 percent increase in spending accompanied by a 50 percent increase in taxes would keep the budget balanced as the increase in spending would be offset by the increase in taxes. However, options A, B, and C would cause a budget deficit as they all involve either a decrease in revenue (taxes) or an increase in expenditure (spending on goods and services or transfer payments).

Starting from a Balanced Budget,which of the Following Would NOT