Question

A recession tends to cause the federal budget deficit to ________ because tax revenues ________ and government spending on transfer payments ________. increase; rise; falls decrease; fall; rises increase; fall; rises decrease; rise; falls'

Answer 1

Answer:

increase; fall; rises 

Explanation:

A recession is when there's a contraction in economic activities. It is when the GDP of a country is negative for two consecutive quarters.

When there's a recession, the government undertakes expansionary fiscal policy to stimulate the economy. Therefore, the government would increase its spending or reduce amount of tax paid. Therefore , government spending rises.

Also, during a recession, tax revenues falls because income of individuals, firms fall and therefore revenue from tax would fall.

I hope my answer helps you.