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- Subject
- The National Economyeconomics-mcqs › the-national-economy
- Published
- 27 May 2019
- Last updated
- 28 May 2026
Explanation
When government spending and taxes remain unchanged, the budget deficit tends to expand during economic recessions due to lower tax revenues and contracts during economic booms when revenues increase.
More The National Economy MCQs
Practice related questions from the same subject.
- 1.How does leakage through imports in an open economy affect the multiplier's magnitude?
- 2.Which components determine the overall multiplier effect in an economy?
- 3.What is the likely effect on economic output if the government raises taxes to fully cover an increase in its spending?
- 4.When households attempt to increase their savings, but equilibrium income shifts without any change in total savings, what economic concept does this illustrate?
- 5.How is the multiplier determined in economic terms?
- 6.If investment is considered autonomous, what factor primarily determines the slope of the aggregate demand (AD) curve?
- 7.In the short-run equilibrium, how does aggregate demand relate to the actual level of output?
- 8.What is the primary cause of unreported earnings when discussing the hidden economy?
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