An annually balanced federal budgetA) enables fiscal policy to be implemented in a timely and selective manner,without the drag on consumption and saving that is usually associated with federal borrowing.B) essentially eliminates the use of fiscal policy for stabilizing the economy.C) could bring the economy up to full employment if a deflationary GDP gap exists.D) would reduce tax collections,thereby stimulating aggregate demanD.E) would disrupt credit markets,making it difficult for the Treasury to sell bonds,bills,and notes.

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Simya DezMonique · Accepted Answer

Final Answer : B, Explanation :  An annually balanced federal budget would essentially eliminate the use of fiscal policy for stabilizing the economy. By balancing the budget every year, the government would not have the option to use deficit spending to stimulate the economy during a recession or use surplus funds to cool down an overheated economy. Therefore, it would limit the government's ability to use fiscal policy to stabilize the economy.

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