Praxis 5004 Practice Test Practice Question
How would a recession with high unemployment most likely affect the United States government?
Correct Answer: C
Rationale: A recession with high unemployment typically leads to decreased consumer spending and lower business profits, resulting in reduced tax revenues for the government.
**Option A** is incorrect; during a recession, tax rates generally do not increase, as governments often seek to stimulate the economy instead.
**Option B** is also wrong; fiscal obligations, such as unemployment benefits and social services, typically rise during a recession, not decrease.
**Option D** is misleading; while there may be calls for regulation, the immediate impact of high unemployment is a drop in revenue, not an increase in demand for regulation.
Thus, the most accurate outcome is a decrease in the revenue available to the government.
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