Question : During a boom, the deficit of the government will reduce automatically due to_________.
Option 1: increase in tax revenue
Option 2: increase in GDP
Option 3: decrease in tax revenue
Option 4: decrease in GDP
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Correct Answer: increase in tax revenue
Solution : The correct answer is an increase in tax revenue.
During a boom, the government's deficit may be reduced due to increased tax revenues. During an economic boom, there is typically higher economic activity, increased business profits, and higher incomes for individuals. This leads to an automatic increase in tax revenues for the government.
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