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1.During a recession in the United States, what happens automatically to tax revenues and government spending?TaxesGovernment Spendinga.IncreaseIncreasesb.DecreaseDecreasesc.IncreaseDecreasesd.DecreaseIncreasese.DecreaseNo Change2.Which of the following is a reason to be concerned about persistent budget deficits?Tackle the Test: Free-Response Questions (answer on loose leaf)1.Consider the information provided below for the hypothetical country of Zeta.Tax revenues = 2,000Government purchases of goods and services = 1,500Government transfers = 1,000Real GDP = 20,000Potential output = 18,000 a.Is the budget balance in Zeta positive or negative? What is the amount of the budget balance?b.Zeta is currently in what phase of the business cycle? Explain.c.Is Zeta implementing the appropriate fiscal policy given the current state of the