Suppose That the Economy Is Experiencing Both an Inflationary Gap

Multiple Choice

Suppose that the economy is experiencing both an inflationary gap and a budget surplus.Which of the following is true?

A) Attempts to balance the budget would be pro-cyclical.
B) Attempts to balance the budget would be counter-cyclical.
C) Attempts to balance the budget would eliminate or reduce the size of the gap.
D) Reducing the size of the gap would reduce the surplus.