Question

Q6. give at least two reasons why the balanced budget approach for the US economy is not a realistic approach in the short-run, despite political advocacy to bring budget back into balance

Answer 1

two reasons why balanced budget approach for US economy is not a realistic approach in short run-

1. It will hurt the economy -  If balance budget is inreoduced every year no matter what is the condition of the economy , the balance budget will risk the economy and makes it effects for longer period which will result in loss of jobs and it will deeply hurt the economy for long term. This will make the policymakers to raise taxes at the time of recession or when will the economy is down

2. Undercut of social security , medicare and other programs-  there is prohibition of medicare and social security and other programs like these in balance budget. Military and civil service retirement funds have to use fund from their own accumulated Reserves and prohibits to use funds from the revenue collected during the year.