If government adhered strictly to an annually balanced budget,the government's budget would

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If the government strictly adhered to an annually balanced budget, it would limit its ability to use fiscal policy as a tool for stabilizing the economy. During a recession, the government would be unable to increase spending to stimulate growth, and during an economic boom, the government would be unable to increase taxes to prevent overheating. This would tend to destabilize the economy, as it would not be able to buffer against economic shocks.

If Government Adhered Strictly to an Annually Balanced Budget,the Government's