Question

+ d x Shifts in aggregate supply artis x wiew ples?id=11834320 IP Some. YouTube C Home Ches.com Congo Connect Sapling MACRO NI MACRO book M eslek Bucian Degree Econ201 Test Tin . Nevoch Sk ON 201 Macroeconomics Wire SOERECHOWSKActivities and Due Dates Econom e bmit All Questions Completed out of 41 01 33 - Save Ans tion 1 of 41 > Budget deficits almost always: O increase when unemployment rises and decrease when unemployment falls. O decrease with inflation and increase with deflation O decrease when unemployment rises and increase when unemployment falls. O increase when the aggregate price level rises and decreases when the gate price level falls A . 6

Answer 1

Ans.- (A)

Budget deficit = Government Expenditure - Tax revenue

When unemployment is high, government spends more on the unemployment benefits so that its expenditures are high and , at the same time, its tax revenue is lower die to higher unemployment. So, budget deficit is high when unemployment is high.