Question 55
MediumOriginal questionMatch each budget with the situation it suits.
| List I | List II |
|---|---|
| A. Deficit budget | I. Raises households' disposable income |
| B. Surplus budget | II. A slump with deficient demand |
| C. Balanced budget | III. A boom with excess demand |
| D. Cut in income tax | IV. Neither adds to nor takes away from demand on balance |
Show the answer and explanation
CorrectNot quiteAnswer B
Correct answer: B
Explanation
A deficit adds demand in a slump; a surplus removes demand in a boom.
A balanced budget is neutral in the simple view; a tax cut leaves more income in households' hands.
- Concept
- Budgets and situations
- Typical timeTypical
- 90 s
- Your timeYours
- —
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Ten questions from Government Budget: Receipts & Expenditure, at your own pace.