In a two-period model,government spending is financed through
A) taxes and transfer payments.
B) taxes and issuing debt.
C) taxes and redeeming debt.
D) taxes only.
E) issuing bonds.

Question

Quizplus · Accepted Answer

In a two-period model, government spending is financed through both taxes and issuing debt. This is because the government cannot raise enough revenue from taxes alone to cover all of its spending, so it must also borrow by issuing debt.

In a Two-Period Model,government Spending Is Financed Through