If the Economy Goes into a Recession, the Cyclically Adjusted

question 45

Multiple Choice

If the economy goes into a recession, the cyclically adjusted deficit is most likely to

• A)remain unchanged, unless government actively changes its fiscal policy.
• B)increase, because government expenditures will rise and tax revenues will decline.
• C)remain unchanged, although there will be a primary budget surplus.
• D)decrease, because government expenditures will decrease and tax revenues will rise.
• E)increase, because government expenditures and tax revenues will both rise.

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Definitions:

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A hypothesis detailing the manner, reason, and speed at which new innovations and technologies propagate across societies.

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