What cannot be done, various reformers in the U. notwithstanding, is to impose on any government the obligation to balance its budget annually….
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What cannot be done, various reformers in the U.S. notwithstanding, is to impose on any government the obligation to balance its budget annually. Consider the consequences. If it did work, it would introduce a major destabilizing element.” Requiring a balanced budget would be destabilizing because a movement towards recession would
a) increase unemployment, prompting a decrease in tax rates or an increase in government spending, both of which would create inflation
b) increase unemployment, prompting an increase in tax rates or a decrease in government spending, both of which would create inflation
c) decrease tax receipts causing a budget deficit, requiring an increase in tax rates or a decrease in government spending both of which would make the recession worse
d) decrease tax receipts causing a budget surplus, requiring an increase in government spending or a decrease in tax rates, both of which would make the recession worse
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