The Provisions in State Constitutions Requiring Them to Balance Their

question 41

Multiple Choice

The provisions in state constitutions requiring them to balance their budgets mean that:

• A)state governments often behave procyclically because lower revenues during recessions means lower state spending.
• B)state government spending acts as an automatic stabilizer for the national economy.
• C)state governments can follow a functional finance approach with greater consistency than the federal government, which has no such requirement.
• D)state governments can only use monetary policy to affect their economies.

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Definitions:

Gains from Specialization

The increased efficiency and output that result when individuals or entities focus on specific tasks or activities they perform best.

Exchange Rates

The worth of one currency in relation to another, establishing how much of one currency can be exchanged for another.

Exchange Rate

The worth of a particular currency when converted into a different currency.

France

A country located in Western Europe known for its historical and cultural significance, notable landmarks, and as a global center for art, science, and philosophy.