Other things being equal a recession is likely to

Question

Quizplus · Accepted Answer

During a recession, the government usually increases spending to stimulate the economy and reduce unemployment. This leads to an increase in federal outlays. However, the recession also leads to a decrease in tax revenues as individuals and businesses have less income and profits, respectively. Therefore, the federal receipts are reduced. Hence, option D is correct as both the federal outlays and receipts are affected during a recession.

Other Things Being Equal a Recession Is Likely to