Question

Which of the following statements is correct? Federal deficits were larger in the early 2000s than in the late 2000s. Deep tax cuts always expand tax revenues and reduce the public debt. The public debt has usually declined during wartime. There is a tendency for the public debt to grow during recessions.

Answer 1

Answer: The correct answer is "There is a tendency for the public debt to grow during recessions."

Explanation:

When the economy of a country is in recession it indicates that economic activity decreases. When this happens, the country stops producing and selling enough goods and services to pay its debts without incurring more debt.