Which of the following is most likely to increase a federal budget surplus?
A)A higher inflation rate and a higher unemployment rate.
B)A higher inflation rate and a lower unemployment rate.
C)A lower inflation rate and a higher unemployment rate.
D)A lower inflation rate and a lower unemployment rate.

Question

Quizplus · Accepted Answer

A higher inflation rate can lead to increased nominal government revenues through mechanisms like bracket creep in the tax system, while a lower unemployment rate typically results in higher tax revenues (due to more people working and paying taxes) and lower government spending on unemployment benefits, both of which can contribute to increasing a federal budget surplus.

Which of the Following Is Most Likely to Increase a Federal