Assume That a Government Has a Balanced Budget When the Economy

Multiple Choice

Assume that a government has a balanced budget when the economy is at full employment. If the economy then enters a recession, with no change in tax or spending laws, then the budget of the government is most likely to:

A) remain balanced.
B) be in deficit.
C) be in surplus.
D) be in either deficit or surplus, depending on the severity of the recession.