Question

During depression, _________ budget is preferable.

• A. balanced
• B. surplus
• C. deficit
• D. none of the above

Answer 1

Answer: (C)

deficit

During depression, deficit budget is preferable because to give the economy a boost, the government has to increase its spending to increase the aggregate demand. This leads to a deficit in the government budget as the money that has been borrowed or raised has to be repaid by the government.