The diagram below shows two budget deficit functions for a hypothetical economy. FIGURE 31-2
-Refer to Figure 31-2.Initially,suppose real GDP is $100 million and the budget deficit is $14 million,as shown by point A.Which of the following events could result in a move from point A to point B?

Question

The diagram below shows two budget deficit functions for a hypothetical economy.  FIGURE 31-2
-Refer to Figure 31-2.Initially,suppose real GDP is $100 million and the budget deficit is $14 million,as shown by point A.Which of the following events could result in a move from point A to point B?

Quizplus · Accepted Answer

Moving from point A to point B would require a decrease in the budget deficit. This can be achieved through the implementation of a contractionary fiscal policy, such as decreasing government spending or increasing taxes. Therefore, option B is the correct choice. Choice A or E would likely increase the budget deficit, while options C and D would not directly impact the budget deficit.

The Diagram Below Shows Two Budget Deficit Functions for a Hypothetical