Expansionary fiscal policy used during economic downturns inevitably leads to a budget -. Suppose the government responds to the downturn by increasing government spending by $250 billion, but keeps tax rates the same. In this scenario, the - will rise by - $250 billion. In a recession, - falls and - rises, which means tax revenues will - even if tax rates do not change.

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Zaniyah Hardin

20 April, 13:09

Expansionary fiscal policy used during economic downturns inevitably leads to a budget -. Suppose the government responds to the downturn by increasing government spending by $250 billion, but keeps tax rates the same. In this scenario, the - will rise by - $250 billion. In a recession, - falls and - rises, which means tax revenues will - even if tax rates do not change.

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Weirdo · Answer 1

Expansionary fiscal policy used during economic downturns inevitably leads to a budget deficit. Suppose the government responds to the downturn by increasing government spending by $250 billion, but keeps tax rates the same. In this scenario, the deficit will rise by more than $250 billion. In a recession, income falls and unemployment rises, which means tax revenues will fall even if tax rates do not change.