When the economy weakens, what generally happens in terms of government budget deficits?

Question

a. Government budgets become balanced.
b. Government budget deficits increase.
c. Government budget surpluses become larger.
d. Government deficits turn into surpluses.

Answer 1

b. Government budget deficits increase.

When the economy weakens, tax revenues typically decline due to lower income and sales, while government spending may increase due to higher demand for social services and unemployment benefits. This combination usually leads to larger budget deficits.