If there is initially a federal budget deficit, and taxes rise, while transfer payments fall:

Name: If there is initially a federal budget deficit, and taxes rise, while transfer payments fall:
Brand: Quizplus
Rating: 4.8 (49 reviews)

Question

Quizplus · Accepted Answer

When taxes rise and transfer payments fall, the government collects more in taxes while spending less on transfer payments, which directly reduces the budget deficit. Additionally, these actions would typically reduce aggregate demand (AD) because consumers have less disposable income to spend.

If There Is Initially a Federal Budget Deficit, and Taxes