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.
Correct Answer:
Verified
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