Asked by Xhorxhina Gjoni on May 03, 2024
Verified
In 1981,U.S.policy makers predicted a balanced budget as:
A) the budget included a decrease in defense expenditures.
B) the budget included an increase in the tax rate.
C) the budget included an increase in unspecified government spending.
D) the growth in GDP was expected to be large enough to lead to an increase in tax revenues despite the tax cut.
E) the growth in GDP was expected to be small enough to require less government spending.
Unspecified Government Spending
Government expenditures not clearly allocated or detailed for specific purposes in official documents.
Tax Rate
The rate at which taxes are levied on an individual or a business entity.
Defense Expenditures
The amount of funding allocated by a nation for its military forces and activities, including salaries, equipment, research, and development.
- Familiarize yourself with the determinants of federal deficits and their repercussions on the U.S. Gross Domestic Product.
- Grasp the implications of discretionary fiscal policy on the economy.
Verified Answer
AS
Abdulhafeth SartawiMay 08, 2024
Final Answer :
D
Explanation :
The prediction of a balanced budget in 1981 was based on the expectation that the growth in GDP would be large enough to lead to an increase in tax revenues despite the tax cut. This means that the government did not have to increase taxes or decrease spending, but still expected to balance the budget due to the increase in tax revenues from a growing economy.
Learning Objectives
- Familiarize yourself with the determinants of federal deficits and their repercussions on the U.S. Gross Domestic Product.
- Grasp the implications of discretionary fiscal policy on the economy.