Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Increased unemployment benefits leading to higher government spending
B
A rise in tax revenues due to increased consumer spending
C
A government initiative to cut taxes for businesses without increasing spending
D
Decrease in public services to balance the budget immediately
Understanding the Answer
Let's break down why this is correct
Answer
During an economic recession, many people lose their jobs, and businesses earn less money. This leads to lower tax revenues for the government because fewer people are working and making money to be taxed. At the same time, the government often spends more money to help those in need, such as providing unemployment benefits or funding public services. For example, if a city has to pay more for social programs while receiving less tax money, it can create a budget deficit, meaning the government is spending more than it earns. Therefore, the combination of lower income and higher spending during a recession is what most likely causes a government budget deficit.
Detailed Explanation
When more people are unemployed, the government pays more in unemployment benefits. Other options are incorrect because Some might think that more spending by people means the government gets more tax money; It's easy to think that cutting taxes will help businesses without costing the government.
Key Concepts
Government Budget Deficits
Economic Recession
Fiscal Policy
Topic
Government Budget Deficits
Difficulty
easy level question
Cognitive Level
understand
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