-Refer to the graph above to answer this question.What does this graph indicate?
A)That government spending is autonomous of real GDP and that net tax revenue is a function of real GDP.
B)That government spending is a function of real GDP and that net tax revenue is autonomous of real GDP.
C)That budget surpluses are possible only at lower levels of real GDP.
D)That budget deficits are possible only at higher levels of real GDP.
E)That a balanced budget can occur at any level of real GDP except Y2.

Question

-Refer to the graph above to answer this question.What does this graph indicate?
A)That government spending is autonomous of real GDP and that net tax revenue is a function of real GDP. 
B)That government spending is a function of real GDP and that net tax revenue is autonomous of real GDP. 
C)That budget surpluses are possible only at lower levels of real GDP. 
D)That budget deficits are possible only at higher levels of real GDP. 
E)That a balanced budget can occur at any level of real GDP except Y2.

Quizplus · Accepted Answer

The graph (though not visible here) typically shows government spending as a flat line, indicating it does not change with real GDP, making it autonomous. Net tax revenue usually slopes upwards, indicating it increases with real GDP, making it a function of real GDP.

-Refer to the Graph Above to Answer This Question