A major problem with the implementation of an annually balanced budget is that it _____
A) allows the national debt to burgeon with chronic deficits.
B) relies on government officials to budget for surpluses during economic booms in order to cover deficits during recessions.
C) requires annual revenues to match with outlays even during times of war, when there is a sudden increase in military expenditures.
D) magnifies fluctuations in the business cycle.
E) dampens swings in the business cycle.

Question

Quizplus · Accepted Answer

An annually balanced budget requires that government revenues match outlays in each year. This can be difficult to achieve during times of economic downturn, when revenues may fall and expenditures may rise. As a result, an annually balanced budget can magnify fluctuations in the business cycle.

A Major Problem with the Implementation of an Annually Balanced