An increase in transfer payments would have the same short run effect on the government deficit as an equal
A)increase in government expenditures.
B)reduction in taxes.
C)increase in taxes.
D)Both A and B.

Question

Quizplus · Accepted Answer

An increase in transfer payments (like unemployment benefits or social security payments) directly increases government spending, similar to an increase in government expenditures on goods and services. Reducing taxes decreases government revenue. Both actions increase the government deficit by either increasing spending or reducing revenue, having a similar short-run effect on the deficit.

An Increase in Transfer Payments Would Have the Same Short