It is impossible for the government to maintain a balanced budget while using fiscal policy to eliminate a recessionary gap.

Question

Quizplus · Accepted Answer

Governments can use fiscal policy to address a recessionary gap by increasing spending or decreasing taxes without necessarily unbalancing the budget, especially if they have surpluses from previous years or if they adjust other areas of spending and revenue to maintain balance.

It Is Impossible for the Government to Maintain a Balanced