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Author Question: According to Keynesian economics, what impact would a balanced budget amendment to our constitution ... (Read 79 times)

Davideckstein7

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on: Jun 30, 2018
According to Keynesian economics, what impact would a balanced budget amendment to our constitution have on our national economy?

Question 2

Incomes policies of the federal government include:
 a. presidential jawboning.
  b. wage-price guidelines.
  c. wage-price controls.
  d. All of these.


skipfourms123

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Reply #1 on: Jun 30, 2018
Answer to Question 1

A balanced budget amendment would destabilize the economy. It would make the business cycle more pronounced exacerbating the problem of unemployment in particular. This is because as the economy contracts, the deficit will rise due to the presence of the automatic stabilizers. Attempts to reduce the deficit, by raising taxes and/or curbing government spending, will reduce total spending (aggregate demand) further, worsening the recession.

Answer to Question 2

d


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