Explain one economic consequence of the government decreasing its budget deficit.

A budget deficit occurs when government spending exceeds tax revenue. To decrease the deficit, the government must implement contractionary fiscal policy: reducing government spending (G) or increasing taxes (T). A key consequence of this is a reduction in aggregate demand (AD). Lower AD can lead to several outcomes, including: - **Slower economic growth:** Firms produce less due to lower demand. - **Higher unemployment:** As firms cut production, they may lay off workers. - **Lower inflation:** Reduced demand in the economy eases pressure on prices. Any of these would be a valid explained consequence.