All of the following contribute to greater deficits when unemployment rises and reduce the deficit during an inflationary gap except for
A)U.S.exports.
B)Welfare benefits.
C)Progressive personal income taxes.
D)Unemployment insurance benefits.

Question

Quizplus · Accepted Answer

In times of high unemployment, U.S. exports tend to decrease, which contributes to a greater deficit. However, during an inflationary gap, U.S. exports tend to increase, which helps reduce the deficit. On the other hand, welfare benefits, unemployment insurance benefits, and progressive personal income taxes all tend to increase during times of high unemployment, which adds to the deficit, but decrease during an inflationary gap, helping to reduce the deficit.

All of the Following Contribute to Greater Deficits When Unemployment