Assume that the economy is in a recession and there is a budget deficit. A strict balanced-budget amendment that would require the federal government to balance its budget during a recession would be:
A. expansionary and worsen the effects of the recession.
B. expansionary and counter the effects of the recession.
C. contractionary and worsen the effects of the recession.
D. contractionary and counter the effects of the recession.
Answer: C
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John derives more utility from having $1,000 than from having $100. From this, we can conclude that John
A) is risk averse. B) is risk loving. C) is risk neutral. D) has a positive marginal utility of wealth.
One way the consumer price index (CPI) differs from the GDP chain price index is that the CPI:
a. uses current year quantities of goods and services. b. includes separate market baskets of goods and services for both base and current years. c. includes only goods and services bought by typical urban consumers. d. is bias free.