Question

PLEASE HELP ASAP The government of Tatooine had a balanced budget last year. However, an unanticipated recession

triggered by the wanton destruction of Jabba's Palace leads to a decrease in tax revenues, even though
government spending and transfer payments did not change.
What happens to the budget deficit and national debt in Tatooine as a result of the decrease in tax
revenues?
Choose 1 answer:
(A
There is a budget deficit; the debt will increase
(B)
There is a budget surplus, national debt will decrease
C) There is a balanced budget; national debt will increase
(D)
There is a budget surplus; no impact on national debt
E) There is a budget deficit; no impact on national debt

Answer 1

There is a budget deficit; the debt will increase

Option 1.

Step-by-step explanation:

With the recession hitting the economy of the country hard, there is fall in the growth and development of the country. The recession of the economy leads to the increase in the debt on the government of the country because there is no revenue..

Since the expenditure of the government remains the same on the economy, the budget of the government gets disturbed and the budget turns into deficit with no revenue and more of expenditure.