Question

When actual GDP is below potential GDP the budget deficit increases because​ of: A. a decrease in transfer payments and a decrease in tax revenues. B. an decrease in transfer payments and an increase in tax revenues. C. an increase in transfer payments and a decrease in tax revenues. D. an increase in transfer payments and an increase in tax revenues.

Answer 1

option c)

Step-by-step explanation:

the correct answer will be option c)

tax revenue is the revenue which is gained through tax imposition on different items.

where transfer payments is the payments made or income received.

when actual GDP is below potential GDP the budget deficit increase because of the transfer value payment increases and the tax revenue is decreases.