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Consider the Government's Budget Deficit Function

Question 46

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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