Which of the following statements is correct?
A) Federal deﬁcits were larger in the early 2000s than in the late 2000s.
B) Deep tax cuts always expand tax revenues and reduce the public debt.
C) The public debt has usually declined during wartime.
D) There is a tendency for the public debt to grow during recessions.

Question

Quizplus · Accepted Answer

During recessions or economic downturns, tax revenues tend to decrease while government spending on welfare programs, unemployment insurance, and other safety nets tends to increase. This often leads to an increase in federal deficits and, subsequently, an increase in the public debt.

Which of the Following Statements Is Correct