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

Question

Quizplus · Accepted Answer

If a tax system fails to provide sufficient tax revenue, issuing treasury bonds can help make up for the shortfall, but cutting funding to various federal projects may also be necessary in order to balance the budget. Simply increasing federal spending or cutting funding without issuing bonds would not address the revenue problem. Therefore, B is the best choice.

Which of the Following Federal Government Actions Would Make Sense