A government that currently has a budget deficit can balance its budget by .
A) increasing tax revenues by more than it increases outlays
B) increasing both tax revenues and outlays by the same amount
C) decreasing tax revenues by more than it increases outlays
D) decreasing tax revenues by more than it decreases outlays

Question

Quizplus · Accepted Answer

By increasing tax revenues by more than it increases outlays, the government will be able to balance its budget. This means that the government will have more money coming in than going out, which will help to reduce the deficit. Increasing both tax revenues and outlays by the same amount would simply maintain the current deficit. Decreasing tax revenues by more than it increases outlays or decreasing tax revenues by more than it decreases outlays would only add to the deficit.

A Government That Currently Has a Budget Deficit Can Balance