Assume that the government is currently balancing the national budget so that outlays equal tax revenue.Then the economy starts into an expansion,and the government decides to decrease government spending by $50 billion.As a result,the federal budget will:

Question

Quizplus · Accepted Answer

During an economic expansion, tax revenues typically increase due to higher incomes and corporate profits. If the government decreases spending by $50 billion, the combination of increased tax revenue and decreased spending will likely result in a budget surplus of at least $50 billion.

Assume That the Government Is Currently Balancing the National Budget