According to mainstream economic analysis, a balanced-budget rule for ﬁscal policy would be
A) countercyclical.
B) ineffective.
C) destabilizing.
D) pro-growth.

Question

Quizplus · Accepted Answer

A balanced-budget rule requires the government to maintain a budget where expenditures equal revenues, regardless of economic conditions. This can be destabilizing because it forces the government to cut spending or raise taxes during a recession, which can exacerbate economic downturns.

According to Mainstream Economic Analysis, a Balanced-Budget Rule for ﬁScal