Statement I: Rapid economic growth would tend to raise the federal budget deficit.
Statement II: The 1990-91 recession raised the budget deficit over the level it would have otherwise been.

Question

Quizplus · Accepted Answer

Statement I is false because rapid economic growth typically increases tax revenues and reduces spending on unemployment benefits, which can lower the federal budget deficit. Statement II is true because recessions usually decrease tax revenues and increase government spending on social services, thus raising the budget deficit.

Statement I: Rapid Economic Growth Would Tend to Raise the Federal