Sia
Question
Microeconomics
Posted 9 months ago
The government of Hamsterville had a balanced budget, but now is experiencing a recession.
Which of the following is most likely to occur as a result of the recession?
Choose 1 answer:
(A) A budget deficit
(B) A balanced budget
(C) Higher tax revenue
(D) Less debt
(E) A budget surplus
Sign in to unlock the answer
Answer from Sia
Posted 9 months ago
Solution
a
Recession Impact: During a recession, economic activity slows down, leading to lower income and profits for individuals and businesses. This typically results in lower tax revenues for the government
b
Government Spending: At the same time, government spending on social welfare programs (like unemployment benefits) tends to increase to support those affected by the recession
c
Budget Deficit: The combination of lower tax revenues and higher government spending usually leads to a budget deficit, where government expenditures exceed revenues
Answer
(A) A budget deficit
Key Concept
Budget Deficit
Explanation
During a recession, the government of Hamsterville is likely to experience a budget deficit due to decreased tax revenues and increased spending on social welfare programs
Not the question you are looking for? Ask here!
Enter question by text
Enter question by image
Unlock Smarter Learning with AskSia Super!
Join Super, our all-in-one AI solution that can greatly improve your learning efficiency.
30% higher accuracy than GPT-4o
Entire learning journey support
The most student-friendly features
Study Other Question