The provisions in state constitutions requiring them to balance their budgets mean that:
A. state governments can follow a functional finance approach with greater consistency than the federal government, which has no such requirement.
B. state government spending acts as an automatic stabilizer for the national economy.
C. state governments often behave procyclically because lower revenues during recessions means lower state spending.
D. state governments can only use monetary policy to affect their economies.
Answer: C
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In an unregulated market for healthcare, there is
A) a deadweight loss from over-providing healthcare. B) a deadweight loss from under-providing healthcare. C) no deadweight loss. D) Any of the above could be correcting depending on how the marginal cost paid by producers compares to the marginal social cost.
An options contract
A) confers the rights to buy or sell an underlying asset at a predetermined price by a predetermined time. B) is another name for a futures contract. C) may be written for debt instruments, but not equities. D) may be written for equities, but not for debt instruments.
Why might voters tend to be relatively uninformed about political issues?
Suppose a monopsonist wants to hire more workers. If it has to pay the same wage rate to all of its workers
a. the marginal labor cost will fall while the wage rate will rise b. the wage rate will fall while the marginal labor cost will rise c. the difference between the wage rate and the marginal labor cost will decrease d. the difference between the wage rate and the supply curve of labor will increase e. both the wage rate and the marginal labor cost will increase