Question #5
Federal government budget deficits
- are good during recessions but ultimately require higher taxation in the future to bring the budget back towards balance.
- are good during recessions because they put money into bank reserves in exchange for longer-maturing bonds.
- are good during recessions because provide direct stimulus to the spending stream and finance private savings.
- are good during recessions but need to be increased with caution because they increase the public borrowing requirement.
Answer #32
Answer: are good during recessions because provide direct stimulus to the spending stream and finance private savings.
Explanation
Please see Deficit spending 101 - Part 1 if you are still wondering why the correct answer is three.