Budget deficits almost always:
A)decrease with inflation and increase with deflation.
B)increase when unemployment increases and fall when unemployment falls.
C)decrease when unemployment increases and increase when unemployment falls.
D)increase when the aggregate price level increases and fall when the aggregate price level falls.

Question

Quizplus · Accepted Answer

Budget deficits often increase when unemployment rises because government spending on social services like unemployment benefits increases, while tax revenues decrease. Conversely, deficits tend to fall when unemployment decreases due to higher tax revenues and reduced need for social spending.

Budget Deficits Almost Always