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

Question

Quizplus · Accepted Answer

If the tax system fails to provide sufficient tax revenue, the federal government can issue treasury bonds to generate revenue. Additionally, they can also cut funding to various federal projects to reduce spending. However, it would not be wise to increase federal spending as that would only exacerbate the problem of insufficient tax revenue. Therefore, issuing treasury bonds and cutting funding to federal projects, but not increasing federal spending, is the best choice.

Which of the Following Federal Government Actions Would Make Sense