The budget deficit tends to decrease then ?
Correct answer: D. GDP increase
- A. GDP decrease rapidly
- B. GDP remains unchanged
- C. GDP decrease slightly
- D. GDP increase
Explanation
In the usual countercyclical relationship, a growing GDP raises tax receipts and lowers transfer payments, causing the budget deficit to fall. Thus, a decrease in the deficit is associated with an increase in GDP.
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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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