Principles of Macroeconomics / Unit 14 MAC 1306 short lesson, about 20 seconds
State and Local Budgets Work Differently
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The idea
State and local governments spend heavily on education, and nearly all of them operate under balanced-budget rules. So they must close gaps in the same year, by raising taxes or cutting spending.
In practice
That forces contraction exactly when a recession has opened the gap.
Where people slip
So one level of government can work against another's stabilisation.
Your place on the trail
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