Question

With a recession, classical theorists recommend that government _________ spending and raise taxes if necessary to balance the budget.

Answer 1

Most states require a balanced budget for state spending.

Step-by-step explanation:

Unlike the federal government, most states already require a balanced budget. However, state requirements range from strict to very weak.

Answer 2

With a recession, classical theorists recommend that government reduce spending and raise taxes if necessary to balance the budget. In classical economic theory, government spending  is not a major concern but consumer spending and business investments which they believe will create a long-term solution for the economy.