Because of the role of automatic stabilizers and discretionary fiscal policy, the historical record of the United States since 1970 shows that the budget tends to:
A)move into a deficit during expansions.
B)move into a surplus during recessions.
C)move into a deficit during recessions.
D)remain balanced throughout expansions and recessions.

Question

Quizplus · Accepted Answer

Automatic stabilizers such as unemployment insurance and progressive income taxes tend to increase government spending and decrease tax revenue during recessions, leading to a budget deficit. Discretionary fiscal policy, such as government spending increases or tax cuts, can also contribute to a budget deficit during recessions. Therefore, the budget tends to move into a deficit during recessions.

Because of the Role of Automatic Stabilizers and Discretionary Fiscal