In balancing a budget, economic booms provide opportunities to:

Question

Quizplus · Accepted Answer

Economic booms typically result in higher tax revenues for the government. This provides an opportunity for the government to use the surplus funds to buy back bonds, reducing the national debt and ultimately leading to lower interest payments. Issuing more bonds or increasing deficits during an economic boom would be imprudent as it would add unnecessary debt and may lead to financial instability in the future. Raising taxes during an economic boom may not be necessary since the government is already collecting more tax revenue than usual.

In Balancing a Budget, Economic Booms Provide Opportunities To