During a period of grave financial crisis in the United States, Congress is pressurized to raise the limit on the maximum amount of money the government can borrow. Congress increases the limit on the condition that it will implement sharp tax hikes and across-the-board spending cuts to compensate for the raise and to ensure that the overall budget deficit decreases. In this scenario, the measures implemented by Congress will most likely create:
A) the fiscal cliff.
B) a reserve requirement.
C) the debt ceiling.
D) an earmark.

Question

Quizplus · Accepted Answer

The fiscal cliff refers to a situation where a series of tax increases and spending cuts are set to occur simultaneously, potentially leading to economic contraction. The scenario described matches this definition.

During a Period of Grave Financial Crisis in the United