A disadvantage of having an annually balanced budget is that government spending would have to:
A)allow the national debt to burgeon with chronic deficits.
B)decline during a recession to offset the increase in tax revenues.
C)rise during a recession to match the increase in tax revenues.
D)rise during an expansion to offset the decline in tax revenues.
E)decline in a recession to match the decrease in tax revenues.

Question

Quizplus · Accepted Answer

With an annually balanced budget, government spending would have to decline in a recession to match the decrease in tax revenues. This can lead to further economic downturn as government spending can be a vital component in stimulating the economy during a recession. Additionally, declining government spending can lead to job losses in the public sector which can have a ripple effect on the economy as a whole.

A Disadvantage of Having an Annually Balanced Budget Is That