What Happens to Deficits During Expansions

question 18

Multiple Choice

What happens to deficits during expansions?

• A) They increase, because tax revenues decline while spending programs increase.
• B) They decrease, because tax revenues decline while spending programs decrease.
• C) They increase, because personal income and corporate profits increase, boosting tax revenue.
• D) They decrease, because personal income and corporate profits increase, boosting tax revenue.
• E) They decrease during recessions and increase during expansions.

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Definitions:

Sherman Act

A landmark federal statute in the antitrust law of the United States, aimed at preserving fair competition by prohibiting monopolies and other practices that restrained trade.

Clayton Act

The Clayton Act is United States antitrust law enacted in 1914, aimed at promoting fair competition and preventing monopolies, anti-competitive mergers, and unethical business practices.

Chicago School

An economic perspective that emphasizes free markets, minimal governmental intervention, and the rationality of economic agents, primarily associated with the University of Chicago.

Antitrust Analysis

The examination of business practices and their impact on market competition, often to determine if they comply with antitrust laws.