Praxis 5004 Practice Test Practice Question
How would a recession with high unemployment most likely affect the United States government?
Correct Answer: C
Rationale: During a recession with high unemployment, many individuals lose their jobs, leading to reduced income and, consequently, lower tax revenues for the government. This decrease in revenue affects the government's ability to fund services and programs.
Option A is incorrect because, in a recession, tax rates typically do not increase; instead, they may be lowered to stimulate the economy.
Option B is also wrong, as fiscal obligations, such as unemployment benefits and social services, often increase during economic downturns.
Option D misrepresents the situation; while some may call for more regulation, typically, the immediate concern is addressing economic stability rather than increased regulation.
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