Trying to annually balance the federal budget during a recession may harm the economy.

Question

Quizplus · Accepted Answer

During a recession, the government may need to increase spending in order to stimulate the economy. However, cutting spending to balance the budget can have the opposite effect and worsen the recession. This is because cuts in government spending can lead to a decrease in demand for goods and services, which can lead to lower economic growth and higher unemployment. Therefore, it may be more advisable to focus on long-term deficit reduction rather than short-term annual balancing during a recession.

Trying to Annually Balance the Federal Budget During a Recession