Question

Several years ago, there was a lot of discussion about a balanced budget amendment. The amendment...

Several years ago, there was a lot of discussion about a balanced budget amendment. The amendment would require that the president submit a budget in which expenditures don’t exceed revenues and that Congress approve it. To what extent would this be a good course of action to take?

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Answer #1

Answer - The provision that the expenditures do not exceed the revenue in budget ,can be beneficial for the economy. The balanced budget model becomes very inflexible for the government . The government does not have the provision for the unforeseen events in the economy. However the surpus would allow the flexibility in budget , provide the funds in case of emergency and will also have a positive impact upon the value of the currency. The surplus will help the government to losen out the burden and ensure more growth oriented functioning .

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