Final answer:
During a recession, tax revenue falls due to lower income levels and increased eligibility for welfare and unemployment benefits. The correct answer is A. recession; falls.
Step-by-step explanation:
When the economy goes into a recession, the amount of taxes collected by the government automatically falls. This is because during a recession, there is a decline in economic output which leads to lower income levels, resulting in less tax revenue for the government. Additionally, automatic stabilizers such as welfare and unemployment benefits lead to more spending, as more individuals become eligible for these programs during times of economic downturn. Conversely, during an economic boom, average income levels rise, resulting in an automatic increase in tax revenue, while fewer people qualify for government assistance, leading to reduced government spending. The correct answer to the question is A. recession; falls.