Question

Some politicians have suggested that the United States enact a constitutional amendment requiring that the Federal government balance its budget annually. Explain why such an amendment, if strictly enforced, would force the government to enact a contractionary fiscal policy, whenever the economy experienced a severe recession.

Answer 1

Some politicians have suggested that the United States enact a Constitutional Amendment requiring that the Federal government balance its budget annually so that they can adjust or lower down their spending especially during recessions. Since United States does not print more money, they redistribute the resources.