Those who are concerned about balanced budget amendments typically argue that balanced budget amendments
A)cause interest rates to be higher than they otherwise would be.
B)would make fluctuations in output around the natural level of output greater.
C)would increase spending in a recession.
D)would reduce national saving.

Question

Quizplus · Accepted Answer

Balanced budget amendments would make fluctuations in output around the natural level of output greater because the government would have to cut spending or raise taxes in response to deficits, which would exacerbate economic downturns. Higher interest rates, reduced national savings, and increased spending in a recession are not necessarily direct consequences of a balanced budget amendment.

Those Who Are Concerned About Balanced Budget Amendments Typically Argue