If there is a constitutional requirement to maintain a balanced budget, then during a recession when tax revenues are shrinking, the government will have to implement
A)contractionary fiscal policy.
B)no change in fiscal policy.
C)expansionary fiscal policy.
D)countercyclical fiscal policy.

Question

Quizplus · Accepted Answer

A balanced budget requirement means the government cannot spend more than it earns. During a recession, with shrinking tax revenues, the government would need to cut spending or increase taxes to maintain the balance, which is contractionary fiscal policy.

If There Is a Constitutional Requirement to Maintain a Balanced