What Happens Typically to a Budget Deficit During a Recession

question 121

Multiple Choice

What happens typically to a budget deficit during a recession?

• A)It increases because of tax changes.
• B)It decreases because of spending decreases.
• C)It decreases automatically.
• D)It increases automatically.

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level in a given period.

Quantity Supplied

The total amount of a specific good or service that producers are willing and able to sell at a given price over a certain period of time.

Real Gross Domestic Product

Real Gross Domestic Product (Real GDP) measures the value of all goods and services produced by an economy over a specific period, adjusted for inflation, reflecting the actual growth in economic output.

Price Level

An average of the current prices of goods and services in an economy, which can fluctuate with changes in production, demand, and inflation.