The introduction of "rainy-day funds" by states would:
A)decrease the procyclical nature of current state budgeting procedures.
B)increase the procyclical nature of current state budgeting procedures.
C)decrease the countercyclical nature of current state budgeting procedures.
D)increase the countercyclical nature of current state budgeting procedures.

Question

Quizplus · Accepted Answer

Rainy-day funds allow states to save money during good economic times and spend it during downturns, which helps to smooth out the budgeting process over the economic cycle, making it less procyclical. This means states are less likely to cut spending or raise taxes during downturns, which would otherwise exacerbate economic fluctuations.

The Introduction of "Rainy-Day Funds" by States Would