State and local governments are limited in their ability to respond to recessions because of
A) local politics and politicians.
B) their desire to always run budget surpluses.
C) the lack of proper economic research and assistance.
D) constitutional and other requirements to balance their budgets.

Question

Quizplus · Accepted Answer

State and local governments are limited in their ability to respond to recessions because they are required by constitutional and other mandates to balance their budgets. This means that they cannot engage in deficit spending or borrow large amounts of money to fund programs and initiatives aimed at stimulating the economy during a recession. This can limit the options available to state and local governments when trying to respond to economic downturns.

State and Local Governments Are Limited in Their Ability to Respond