Which of the following statements best describes a cyclical budget deficit and its implications for government spending?

A cyclical budget deficit occurs when a government spends more money than it earns during economic downturns, usually because tax revenues decrease as people earn less. This type of deficit is temporary and often happens when the economy is not doing well, leading to lower income for citizens and businesses, which means less tax money for the government. For example, during a recession, a government might increase spending on unemployment benefits to help people who lost their jobs, even if it means borrowing more money. The implication is that while this can help the economy recover by providing support, it can also lead to higher debt that may need to be addressed later when the economy improves and revenues increase again. Understanding cyclical deficits helps us see how government spending can be used as a tool to stabilize the economy during tough times.