An increase in taxes or a decrease in spending during an economic expansion can
(a) increase the budget deficit but pay off some of the government debt.
(b) work to decrease the budget deficit and pay off some of the government debt.
(C)work to decrease the budget deficit but will not pay off any of the government debt.
(E) increase the budget deficit and increase the size of the government debt.
(f) work to decrease the budget deficit and increase the government debt.
The correct option is (b) work to decrease the budget deficit and pay off some of the government debt.
Expansion, in economics, an upward trend in the business cycle,
characterized by an increase in production and employment, which in
turn causes an increase in the incomes and spending of households
and businesses. Although not all households and businesses
experience increases in income, their greater confidence about the
future during an expansion prompts them to make larger purchases
and investments.
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