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During a recession,higher welfare outlays:
A) increase the size of the budget deficit even if the government does not undertake discretionary fiscal policy.
B) decrease the size of the budget deficit regardless of the government's discretionary fiscal policy.
C) increase the size of the budget deficit only if the government undertakes discretionary fiscal policy.
D) decrease the size of the budget deficit only if the government undertakes discretionary fiscal policy.
E) have the same effect on the budget deficit as they do in times of expansion.
Welfare Outlays
Expenditures made by governments aimed at supporting the wellbeing of citizens, including benefits for the unemployed, poor, disabled and elderly.
Discretionary Fiscal Policy
Government policy actions, through spending or taxation, aimed at influencing economic conditions based on current economic assessments.
Budget Deficit
The financial situation where an entity's expenses exceed its revenues within a given timeframe.
- Identify the role of automatic stabilizers in the federal budget and their impact on the economy.
- Evaluate the impact of government spending and tax policies on economic cycles.
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Learning Objectives
- Identify the role of automatic stabilizers in the federal budget and their impact on the economy.
- Evaluate the impact of government spending and tax policies on economic cycles.
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