Consider the Government's Budget Deficit Function Over a Two-Year Time

Multiple Choice

Consider the government's budget deficit function over a two-year time span - Years 1 and 2.Suppose in Year 2 there was a lower federal budget deficit than in Year 1.This could be explained by ________ in Year 2.

A) higher government expenditures (with constant real GDP)
B) higher real GDP (with constant fiscal policy)
C) lower real GDP (with constant fiscal policy)
D) a higher stock of government debt
E) an upward shift of the budget deficit function