During an economic expansion, budget revenues:Group of answer choicesand government outlays decrease.remain constant.decrease.increase.
Question
During an economic expansion, budget revenues:Group of answer choicesand government outlays decrease.remain constant.decrease.increase.
Solution
During an economic expansion, budget revenues increase.
Here's why:
Step 1: An economic expansion is a period of economic growth, where there's an increase in employment, consumer spending, and business profits.
Step 2: With more people employed, more income is being earned, which means more income tax is being paid to the government.
Step 3: Similarly, with increased consumer spending and business profits, more sales tax and corporate tax is being paid.
Step 4: All these factors contribute to an increase in budget revenues for the government.
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