If there is initially a federal budget deficit, and government purchases and transfer payments both fall:
A) there is an indeterminate effect on both AD and the budget deficit.
B) AD increases and the budget deficit increases.
C) AD increases and the budget deficit decreases.
D) AD decreases and the budget deficit increases.
E) AD decreases and the budget deficit decreases.
Correct Answer:
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Q104: If there is initially a federal budget
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