People who want the federal government to restrict spending or raise taxes during booms and use surpluses from the booms to offset deficits during recessions would agree with the _____ approach to federal finance.

Question

Quizplus · Accepted Answer

The cyclically balanced budget approach advocates for balancing the budget over the business cycle, meaning running deficits during recessions and surpluses during booms. This aligns with the belief that the government should use surpluses from booms to offset deficits during recessions. The annually balanced budget approach (A) calls for balancing the budget every year, regardless of the state of the economy. Functional finance (C) argues that the government should focus on achieving full employment and price stability, rather than balancing the budget. The trade balanced budget (D) focuses on balancing the balance of trade, rather than the overall federal budget.

People Who Want the Federal Government to Restrict Spending or Raise