During a recession,automatic stabilization causes the government budget deficit to
A)fall.
B)increase.
C)remain stable.
D)move in the same direction as Y.

Question

Quizplus · Accepted Answer

During a recession, automatic stabilization increases government spending on programs like unemployment insurance and decreases tax revenue due to lower consumer spending and corporate profits. This leads to an increase in the government budget deficit.

During a Recession,automatic Stabilization Causes the Government Budget Deficit to