Increases in the federal budget deficit from 2007 to 2009 were caused
A)exclusively by the loss of tax revenue due to recession.
B)exclusively by expansionary fiscal policy, as shown through growth in the cyclically adjusted deficit.
C)primarily by a combination of recession and expansionary fiscal policy.
D)primarily by increased outlays to a rapidly growing number of Social Security recipients.

Question

Quizplus · Accepted Answer

The federal budget deficit increased due to both the recession, which reduced tax revenues, and expansionary fiscal policies, such as stimulus spending, aimed at mitigating the recession's impact.

Increases in the Federal Budget Deficit from 2007 to 2009