Do economists believe that the budget should be balanced each fiscal year?
A)Yes, a budget should be balanced annually; otherwise persistent budget deficits can cause havoc in the economy.
B)Yes, as the law states that both the federal and state budgets should always be balanced.
C)Yes, since the balanced budget multiplier is larger, so it makes the economy grow faster.
D)No, a budget should be balanced only on average; it can be in a deficit during a recession and offset by surpluses when the economy is doing well.

Question

Quizplus · Accepted Answer

Economists generally believe that a budget should be balanced only on average, not necessarily every fiscal year. During an economic recession, running a deficit can help mitigate the effects of the downturn. In contrast, when the economy is doing well, the government can run a surplus to pay down debt and prepare for future downturns.

Do Economists Believe That the Budget Should Be Balanced Each