Question

If pressure is put on the government to maintain a balanced budget during a recession. In this scenario, government would need to _____ taxes, which would cause aggregate demand to

Answer 1

Answer: decrease,decrease

Explanation:

During recession, government increases government spending and decreases tax rates. Now, to maintain a balanced budget government is a situation in financial planning or the budgeting process where total revenues are equal to or greater than total expenses. A budget can be considered balanced in hindsight after a full year's worth of revenues and expenses have been incurred and recorded. A company's operating budget for an upcoming year can also be called balanced based on predictions or estimates. The phrase "balanced budget" can refer to either a situation where revenues equal expenses or where revenues exceed expenses, but not where expenses exceed revenues. The balanced budgeting is a constitutional rule requiring that a state cannot spend more than its income. It requires a balance between the projected receipts and expenditures of the government.