-Refer to the Figure Above to Answer This Question

Multiple Choice

-Refer to the figure above to answer this question.What is most likely to happen if the level of GDP is Y₁ and the government reduces its spending from G₁ to G₂ in an attempt to balance its budget?

A) The budget would be balanced at the new GDP level Y₂.
B) GDP would remain at Y₁,but the budget would be in deficit.
C) GDP would be Y₂,and the budget would be in deficit.
D) GDP would be Y₂,and the budget would be in surplus.