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