Federal Budget Deficits Grow During Recessions Because
GDP Federal Spending Non-federal Spending Net Exports. A possible explanation for the persistence of the US. Federal Deficits And The National Debt Principles Of Economics 2e Both tax revenues and transfer payments decrease. . Tax revenues increase while transfer payments decrease. Job creation gives more people money to spend which further boosts growth. Recessions are associated with budget deficits. The federal budget deficit is not an accident. Monetary and fiscal policy TOP. For any given year the federal budget deficit is the amount of money the federal government spends minus the amount of revenues it takes in. Both tax revenues and transfer payments decrease. Commerce slowed unemployment reached rates not seen since the Great Depression and many businesses were forced to close. Its a result of expansionary fiscal policy. Economic growth by formula requires growing dollar supplies.