If the federal government attempts to eliminate a budget deficit during a depression,these efforts will:
A)shift the investment demand curve to the right
B)raise exports
C)contribute to inflation
D)reduce the severity of the depression
E)intensify the depression

Question

Quizplus · Accepted Answer

Attempting to eliminate a budget deficit during a depression means reducing government spending, which can lead to a decrease in aggregate demand. This decrease in demand can intensify the depression, as firms have fewer customers and must lay off workers, contributing to higher unemployment and lower output.

If the Federal Government Attempts to Eliminate a Budget Deficit