Asked by
Arien Drozy
on Oct 13, 2024
Verified
An attempt to maintain an annually balanced budget would
A) destabilize the economy.
B) cause output to remain at the full-employment level of real GDP.
C) stabilize the economy if investment is unaffected by changes in government spending;otherwise the economy will tend to be destabilized.
D) stabilize the economy.
E) have no effect on the level of,or the fluctuations in,real GDP.
Annually Balanced Budget
A financial statement showing that projected government revenues equal expected expenditures on an annual basis.
Destabilize
To cause a system, situation, or environment to become unstable or out of balance.
Economy
The large set of interrelated production, consumption, and exchange activities that aid in determining how scarce resources are allocated.
- Clarify the function of fiscal policy in maintaining economic stability and identify the constraints of automatic stabilizers.
Verified Answer
BL
Learning Objectives
- Clarify the function of fiscal policy in maintaining economic stability and identify the constraints of automatic stabilizers.
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