Which one of the following happens automatically if the economy goes into a recession?
A)Revenues decrease and government outlays do not change.
B)Government outlays increase and revenues do not change.
C)The government budget deficit decreases.
D)Both government outlays and revenues increase, and the deficit stays the same.
E)The government budget deficit increases or the government budget surplus decreases.

Question

Quizplus · Accepted Answer

If the economy goes into a recession, tax revenues tend to decrease as incomes and profits decline. At the same time, government outlays such as unemployment benefits and other social programs tend to increase. As a result, the government budget deficit widens or the government budget surplus decreases.

Which One of the Following Happens Automatically If the Economy