In order to maintain a balanced budget every year,during a recession the government would have to
A)Decrease the money supply.
B)Increase the money supply.
C)Decrease spending or increase taxes or both.
D)Increase spending or decrease taxes or both.

Question

Quizplus · Accepted Answer

During a recession, the government would have to take measures to reduce its spending or increase its revenue (taxes) or both in order to maintain a balanced budget. Cutting spending or increasing taxes would reduce the amount of money flowing in the economy, but it would also help to prevent inflation, which can worsen a recession. Increasing spending or decreasing taxes would stimulate the economy in the short term, but it would also worsen the deficit and potentially lead to higher inflation in the long term. Thus, decreasing spending or increasing taxes or both is the best option to maintain a balanced budget during a recession.

In Order to Maintain a Balanced Budget Every Year,during a Recession