The figure to the right shows a pair of budget deficit functions. Assume thatinitially the budget deficit function is (G+ID-T) The economy, initially atY₁, then experiences a recession. The government attempts to reduce thesize of the recession with an expansionary fiscal policy, and the economyends up at an output level of Y₂. The effect on the government budgetdeficit would be best shown asO O OA. the change from 0 to D1.B. the change from 0 to D2.C. the change from 0 to D3.OD. the change from D1 to D2.E. the change from D1 to D3.Click to select your answer and then click Check Answer.Deficit/Surplus (in billions of dollars)500-400-300-200-IDSD2D1100-0--100--200--300-The Budget Deficit Function300800Y₂Y₁9001200(G+ID-T)₁(G+iD-T)Real GDP (in billions of dollars)dou*

The figure to the right shows a pair of budget deficit functions. Assume that initially the budget deficit function is (G+ID-T). The economy, initially at Y₁, then experiences a recession. The government attempts to reduce the size of the recession with an expansionary fiscal policy, and the economy ends up at an output level of Y₂. The effect on the government budget deficit would be best shown as OA. the change from 0 to D1. B. the change from 0 to D2. OC. the change from 0 to D3. OD. the change from D1 to D2. OE. the change from D1 to D3. Deficit/Surplus (in billions of dollars) 500- 400- 300+ 200- IDs. D2 D1 100- 0- -100- -200- -300-4 The Budget Deficit Function 300 800 Y₂ Y₁ 8 900 1200 (G+D-T)₁ (G+iD-T)o Real GDP (in billions of dollars) 5

The figure to the right shows a pair of budget deficit functions. Assume that initially the budget deficit function is (G+ID-T). The economy, initially at Y₁, then experiences a recession. The government attempts to reduce the size of the recession with an expansionary fiscal policy, and the economy ends up at an output level of Y₂. The effect on the government budget deficit would be best shown as OA. the change from 0 to D1. B. the change from 0 to D2. OC. the change from 0 to D3. OD. the change from D1 to D2. OE. the change from D1 to D3. Deficit/Surplus (in billions of dollars) 500- 400- 300+ 200- IDs. D2 D1 100- 0- -100- -200- -300-4 The Budget Deficit Function 300 800 Y₂ Y₁ 8 900 1200 (G+D-T)₁ (G+iD-T)o Real GDP (in billions of dollars) 5

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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