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Answer the following questions either true, false, explain your answer. The explanation is the most important...

Answer the following questions either true, false, explain your answer. The explanation is the most important part of your answer.

  1. The deficit will decrease during recessions and increase during expansions.
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Answer #1

False

The deficit will increase during recessions and decrease during expansions.

During a recessionary period the national income falls. This relates to lesser tax revenues for the government. But there are some expenditures which reamin the smae for the government and cutting costs is not an potion, like expenditure in national defense or cuts in health benefits. To pay for this ( with a lesser receipts to begin with) the government borrows the money to meet ends meet.

Similary in boom period, due to excessive receipts a government spends more of its receipts and often pays of its previous debt.

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