If for every dollar increase in farm subsidies the government decreased urban welfare payments by a dollar,we would expect the net effect to be
A)an increase in the budget deficit because government spending has increased
B)a decrease in the budget deficit because transfer payments are not included in the government's budget
C)an increase in the budget deficit because transfer payments have increased
D)an increase in the budget deficit because farm subsidies are transfer payments but urban welfare payments are not
E)no change in the budget deficit

Question

Quizplus · Accepted Answer

If for every dollar increase in farm subsidies the government decreased urban welfare payments by a dollar, there would be no change in the budget deficit since the two programs would offset each other. The increase in farm subsidies would be paid for by the decrease in urban welfare payments, resulting in no net increase in government spending.

If for Every Dollar Increase in Farm Subsidies the Government