Question

An increase in taxes or a decrease in spending during an economic expansion can (a) increase...

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.

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Answer #1

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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