Maintaining a balanced budget during an economic recession would be the difficul

Question

Maintaining a balanced budget during an economic recession would be the difficult to implement because A.  personal income taxes would have to be raised in order to compensate for lower tax revenues B.  transfer payments would have to be reduced in order to curb spending C.  corporate income taxes would have to be raised in order to compensate for lower tax revenues D.  all of the above Maintaining a balanced budget during an economic recession would be the difficult to implement because A.  personal income taxes would have to be raised in order to compensate for lower tax revenues B.  transfer payments would have to be reduced in order to curb spending C.  corporate income taxes would have to be raised in order to compensate for lower tax revenues D.  all of the above

Explanation / Answer

d) all of the above

During a recession the fiscal policy that is followed is expansionary fiscal policy . In this policy government spends more or cuts down taxes to increase money supply in the economy . Now a balanced budget means expenditure = revenue . During a recession production falls , consumption falls , so revenue from taxes on them also falls . So to maintain a balanced budget personal income taxes , corporate taxes have to be increased and transfer payments reduced . This will make the recession worse .

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