Use Figures 1 8 and 1 9 to determine why the total government deficit was large during the 20082009 recession Was the deficit large because taxes fell, because spending rose, or both Figure 1 8 Figure 1 9 38 36 Spending 34 32 30 28 26 Taxes 24 22 20 18 1940 1950 1960 1970 1980 1990 2000 2010 2020 Year Percentage of GDP 6 4 2 6 8 10 12 1940 1950 1960 1970 1980 1990 2000 2010 2020 Year Percentage of GDP

Question: Use Figures 1.8 and 1.9 to determine why the total government deficit was large during the 20082009 recession. Was the deficit large because taxes fell,

Use Figures 1.8 and 1.9 to determine why the total government deficit was large during the 2008€“2009 recession. Was the deficit large because taxes fell, because spending rose, or both?

Figure 1.8:

38 36 Spending 34 32 30 28 26 Taxes 24 22 20 18 1940 1950 1960 1970 1980 1990 2000 2010 2020 Year Percentage of GDP

Figure 1.9:

6. 4 -2 -6 -8 -10 -12 1940 1950 1960 1970 1980 1990 2000 2010 2020 Year Percentage of GDP

38 36 Spending 34 32 30 28 26 Taxes 24 22 20 18 1940 1950 1960 1970 1980 1990 2000 2010 2020 Year Percentage of GDP 6. 4 -2 -6 -8 -10 -12 1940 1950 1960 1970 1980 1990 2000 2010 2020 Year Percentage of GDP

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