What happens typically to a budget deficit during a recession?
A)It increases because of tax changes.
B)It decreases because of spending decreases.
C)It decreases automatically.
D)It increases automatically.

Question

Quizplus · Accepted Answer

During a recession, government spending tends to increase (e.g. unemployment benefits, stimulus packages) while tax revenue tends to decrease due to decreased economic activity. This leads to an increase in the budget deficit.

What Happens Typically to a Budget Deficit During a Recession