Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
surplus
B
balance
C
deficit
D
surplus budget
Understanding the Answer
Let's break down why this is correct
Answer
When a government goes through a recession, it usually means that the economy is not doing well, and people are earning less money. Because of this, the government collects less in taxes, which are based on people's income and business profits. At the same time, more people may need help from the government, such as unemployment benefits or food assistance, leading to higher spending. When the government spends more money than it earns, this situation creates a budget deficit. For example, if a government typically collects $100 million in taxes but spends $120 million during a recession, it ends up with a $20 million deficit.
Detailed Explanation
A deficit happens when a government spends more money than it earns. Other options are incorrect because A surplus means the government has more money than it spends; A balanced budget means spending equals income.
Key Concepts
Government Budget Deficits
Fiscal Policy
Economic Recession
Topic
Government Budget Deficits
Difficulty
medium level question
Cognitive Level
understand
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