Consider the Government's Budget Deficit Function

question 124

Multiple Choice

Consider the government's budget deficit function.If the economy goes into a recession,a government budget deficit is most likely to

• A)increase,because government expenditures and tax revenues will both rise.
• B)increase,because government expenditures will rise and tax revenues will decline.
• C)remain unchanged,although there will be a primary budget surplus.
• D)remain unchanged,because changes in government expenditures and tax revenues will balance each other out.
• E)decrease,because government expenditures will decrease and tax revenues will rise.

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