• The economy is at full employment, with fairly low levels of unemployment and inflation. What is likely to happen to GDP, unemployment, interest rates, and inflation if a budget surplus is realized.

D)

	A.	GDPIncrease, Unemployment falls, interest rates rise, inflation rises.
	B.	GDP falls, Unemployment increases, interest rate fall,inflation fall
	C.	GDP Constant Unemployment remains constant, interest rates constant, inflation constant
	D.	GDP increases, Unemployment increases,interest rates rise, inflation falls