Question

A Balanced Budget is considered less effective during which of the following situations?

Options

• War and emergencies

• Periods of stable economic conditions

• Periods when aggregate demand must be increased

• Periods of inflation control

Answer 1

A Balanced Budget is less effective during war and emergencies, when large, unbalanced government expenditure is typically required. It is suitable only for a stable economy and cannot ensure full employment during underemployment.