Starting from a balanced budget, for a given tax rate, an increasing in income will cause the government budget to ?
Correct answer: A. move into surplus
- A. move into surplus
- B. move into deficit
- C. remain unchanged
- D. None of the above above
Explanation
When income rises at a fixed tax rate, tax revenue increases while government spending is initially unchanged. The resulting excess of revenue over expenditure moves the budget into surplus.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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