In 1987, what happened to Reagan's proposed budget?

• A. It was passed by Congress without changes.
• B. It was rejected by Congress.
• C. It led to immediate tax increases.
• D. It caused a stock market crash.

Answer: (B)

The key idea is that a president’s budget is a proposal, not law, and Congress has the power to approve, modify, or reject it. In 1987, Reagan’s proposed budget did not become law as he submitted it; Congress rejected it and instead moved forward with its own budget plan, reflecting the clash between the executive and legislative branches over taxes and spending. This shows how fiscal policy is shaped through congressional action, not just presidential proposals. The stock market crash of 1987 was a separate event, and budget legislation often involves changes to taxes only through specific laws—not automatically from a rejected proposal.