Which of the following federal government actions would make sense if a tax system fails to provide sufficient tax revenue?
A) Issue treasury bonds
B) Cut funding to various federal projects
C) 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 a tax system fails to provide sufficient tax revenue, the government may need to borrow money by issuing treasury bonds to make up for the shortfall. At the same time, in order to prevent any further financial trouble, funding for certain federal projects may need to be cut. Increasing federal spending at this point would only worsen the situation, so option D - issuing treasury bonds and cutting funding to various federal projects but not increasing federal spending - would make the most sense.

Which of the Following Federal Government Actions Would Make Sense