Deficit rises in a recession and falls in a boom, even with no change in fiscal policy.

Question

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During a recession, tax revenues tend to decrease and social welfare spending tends to increase, leading to an increase in the deficit. In a boom, tax revenues tend to increase and social welfare spending tends to decrease, leading to a decrease in the deficit. This happens even without any deliberate changes in fiscal policy.

Deficit Rises in a Recession and Falls in a Boom