An Increased Federal Budget Deficit Resulting from a Recession Can

question 80

Multiple Choice

An increased federal budget deficit resulting from a recession can actually help stabilize an economy, because corporate profits tend to fall in a recession which, in turn, results in ________ corporate taxes and ________.

• A) higher; more tax revenue for the government
• B) higher; larger profits for businesses
• C) lower; fewer spending cuts for businesses
• D) lower; increases in the price level

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Definitions:

Population Decline

A reduction in the number of people in a particular area, which could be caused by factors like low birth rates, high death rates, migration, or disease.

Average Annual Rate

The average yearly interest rate on investments or loans, taking into account the effect of compounding.

Strip Bond

A debt security that has had its principal and coupon payments separated, or "stripped", to be sold individually.

Nominal Rate

The nominal rate is the stated interest rate of a loan or investment, not accounting for compounding or inflation.