In 2015, the Canadian federal government abandoned its commitment to maintaining a balanced budget, opting instead to plan for deliberate fiscal deficits. This policy shift occurred alongside a sharp decline in global crude oil prices, which significantly reduced Canada's export revenues.
Explain one reason why a government might choose to run a budget deficit rather than pursuing a balanced budget during an economic slowdown caused by an external commodity shock.
44 exam-style questions on Edexcel A A Level Economics 4.5.3 Public sector finances. Each one has a worked solution and a mark scheme showing where the marks go.