A recession tends to cause the federal budget deficit to ________ because tax revenues ________ and government spending on transfer payments ________.

Question

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During a recession, tax revenues tend to fall due to lower economic activity and unemployment, while government spending on transfer payments (e.g. unemployment benefits) tends to rise as more people become unemployed. This leads to an increase in the federal budget deficit.

A Recession Tends to Cause the Federal Budget Deficit to ________