To reduce distortions in the economy, it is probably better to finance temporary large government spending with:
A) taxes.
B) capital inflows.
C) exports.
D) national asset sales.
E) deficits.

Question

Quizplus · Accepted Answer

Financing temporary large government spending with deficits is often considered a better option to reduce distortions in the economy because it spreads the cost over time, avoiding immediate tax increases or the sale of national assets, which can have more immediate and potentially negative impacts on the economy. Deficits allow the government to borrow against future income, smoothing out the economic impact.

To Reduce Distortions in the Economy, It Is Probably Better