Many states have rules requiring that they balance their budgets.These rules:
A) make automatic stabilizers more effective.
B) fully offset the effects of automatic stabilizers at the federal level.
C) help ensure that the federal government budget will be balanced.
D) limit the ability of government at all levels to offset the effects of a recession.

Question

Quizplus · Accepted Answer

Rules requiring states to balance their budgets limit their ability to use deficit spending to offset the effects of a recession. This means they have less flexibility to stimulate the economy during a downturn compared to the federal government, which can engage in deficit spending.

Many States Have Rules Requiring That They Balance Their Budgets