The Argument That a Balanced Budget Amendment Would Be "Pro-Cyclical

question 2

Multiple Choice

The argument that a Balanced Budget Amendment would be "pro-cyclical" means that it would cause

• A)bad times to be better than they would otherwise be.
• B)good times to be worse than they would otherwise be.
• C)bad times to be worse than they would otherwise be.
• D)bad times to be better and good times to be worse than they would otherwise be.

---

Definitions:

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit; an important metric in understanding per unit profitability and in break-even analysis.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Cost Per Unit

The cost that varies with the level of output or activity and is typically assessed on a per-unit basis.

Fixed Cost Per Unit

This is the calculated cost assigned to each unit of production, derived by dividing the total fixed costs by the number of units produced.