For given government spending and taxation the government budget deficit will grow in _________ and decline in __________?
Correct answer: D. recessions, booms
- A. booms, booms
- B. recession, recession
- C. booms, recessions
- D. recessions, booms
Explanation
A recession raises the deficit through lower tax receipts and higher transfer payments, while a boom improves the budget balance through stronger revenues and lower transfers.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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