The Federal Budget Is Balanced and the Economy Is on the Upward-Sloping

Multiple Choice

The federal budget is balanced and the economy is on the upward-sloping portion of the Laffer curve.Then,tax rates are cut and government purchases are increased.Is a budget deficit inevitable?

A) No,because a cut in tax rates (on the upward-sloping portion of the Laffer curve) increases tax revenues,and if the increase in tax revenues equals the increase in government purchases there is no deficit.
B) Yes,because a cut in tax rates (on the upward-sloping portion of the Laffer curve) lowers tax revenues.
C) No,because a cut in tax rates (on the upward-sloping portion of the Laffer curve) decreases tax revenues,and if the decrease in tax revenues is less than the increase in government purchases there is no deficit.
D) Yes,because a cut in tax rates (on the upward-sloping portion of the Laffer curve) raises interest rates,and higher interest rates discourage investment spending.