At what point would an economic recession cause a government’s budget deficit to increase?
- AThe government increases tariffs on imports with inelastic demand and keeps the total amount it spends on unemployment benefit unchanged.
- BThe government keeps the unemployment benefit rate and direct and indirect tax rates unchanged.
- CThe government reduces foreign aid and widens the tax base.
- DThe government reduces the unemployment benefit rate and decreases the tax free allowance on income tax.