A constitutional amendment has been proposed that would force Congress $to$ balance the budget each year $(thatis,$ outlays must equal revenues $in$ each year$).$ How would a balanced$-$budget amendment affect the following, $ifin$ the $absenceof$ such $an$ amendment the Federal government would run a large deficit?

$a.$ The use $of$ automatic stabilizers.

$A.$

automatic stabilizers would work even better

$B.$

automatic stabilizers would $be$ neutralized

$C.$

automatic stabilizers would not $be$ affected $at$ all

Part $2$

$b.$ The ability $of$ Congress $to$ "smooth" taxes over time.

$A.$

taxes would not $be$ smooth over time, $as$ the government would have $to$ raise taxes when times were good and reduce taxes when times were bad

$B.$

tax smoothing would not $be$ affected

$C.$

taxes would not $be$ smooth over time, $as$ the government would have $to$ raise taxes when times were bad and reduce taxes when times were good

Part $3$

$c.$ The ability $of$ Congress $to$ make capital investments.

$A.$

The private sector would efficiently provide all the investment the government needs $to$ undertake

$B.$

Congress could not borrow for investment, which fails $to$ recognize that capital formation would help future generations

$C.$

Congress would have $to$ ask foreign governments $to$ invest $in$ America