Which of the following federal government actions would make sense if a tax system fails to provide sufficient tax revenue?
A) Only issue treasury bonds.
B) Only cut funding to various federal projects.
C) Only increase federal spending.
D) Issue treasury bonds and cut funding to various federal projects but not increase federal spending.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

If a tax system fails to provide sufficient tax revenue, the government can issue treasury bonds to generate revenue, but this can lead to an increase in national debt. However, the government can also cut funding to various federal projects to reduce unnecessary spending. It is not advisable to increase federal spending, as this would further exacerbate the problem of insufficient tax revenue. Therefore, the best option is to issue treasury bonds and cut funding to various federal projects but not increase federal spending.

Which of the Following Federal Government Actions Would Make Sense