Need-based spending ________ during an expansion and ________ during a recession,which leads to larger budget deficits during the ________ phase of the business cycle.
A)increases;decreases;recession
B)decreases;increases;expansion
C)decreases;increases;recession
D)decreases;decreases;expansion
E)increases;decreases;expansion

Question

Quizplus · Accepted Answer

In a recession, individuals' incomes decrease leading to an increase in need-based spending such as unemployment benefits, Medicaid, and food stamps. In an expansion, individuals' incomes increase reducing the need for such spending. This leads to a decrease in need-based spending during expansion and an increase during a recession. Larger budget deficits occur during the recession phase because of the increase in spending and decrease in tax revenues.

Need-Based Spending ________ During an Expansion and ________ During a Recession,which

Need-Based Spending During an Expansion and During a Recession,which