Holding everything else constant, the government's budget balance during an expansion will:
A)move toward a larger surplus or reduced deficit.
B)remain the same.
C)move toward a reduced deficit or a smaller surplus.
D)be equal to 100.

Question

Quizplus · Accepted Answer

During an economic expansion, tax revenues typically increase due to higher incomes and corporate profits, while government spending on welfare programs tends to decrease, leading to a larger surplus or reduced deficit.

Holding Everything Else Constant, the Government's Budget Balance During an Expansion