Which situation is most likely to result in a government having a budget deficit for a year?A.A government decides to build an expensive new highway system while also lowering taxes.B.A government cuts funding to income assistance programs for veterans and the elderly.C.A government decides that all its spending programs will be discretionary instead of mandatory.D.A government raises taxes on corporations in an effort to quickly pay off its entire national debt.SUBMITarrow_backPREVIOUS
Question
Which situation is most likely to result in a government having a budget deficit for a year?A.A government decides to build an expensive new highway system while also lowering taxes.B.A government cuts funding to income assistance programs for veterans and the elderly.C.A government decides that all its spending programs will be discretionary instead of mandatory.D.A government raises taxes on corporations in an effort to quickly pay off its entire national debt.SUBMITarrow_backPREVIOUS
Solution
The situation most likely to result in a government having a budget deficit for a year is A. A government decides to build an expensive new highway system while also lowering taxes.
Here's why:
A budget deficit occurs when a government spends more than it earns in revenue. In option A, the government is undertaking a large expenditure (building a new highway system) while also reducing its income (lowering taxes). This combination of high spending and reduced income is likely to result in a budget deficit.
In contrast, options B and D involve actions that would likely reduce a budget deficit or even result in a budget surplus. In option B, the government is cutting spending, and in option D, it is increasing its income.
Option C is a bit more complex. Whether changing all spending to discretionary would result in a deficit depends on the specific spending decisions made. However, it doesn't inherently involve high spending or reduced income like option A does.
Similar Questions
Which situation is most likely to result in a government having a budget surplus for a year?A.A government is forced to spend extra money to help its citizens recover after a natural disaster.B.A government begins providing health care to all citizens using tax money in the federal budget.C.A government shuts down an expensive defense program while increasing taxes on corporations.D.A government lowers taxes on businesses while keeping all its spending at the same level.
In which situation is a government most likely to allow for spending during a deficit?A.A period when local taxes are very highB.A period of very low economic growthC.A period of very high economic growthD.A period when state taxes are very high
Governments create budget deficits when they:A.refuse to pay for mandatory spending programs.B.spend more money than they take in through taxes.C.increase taxation without increasing spending.D.cannot agree on a spending bill that creates a federal budget.
If a government spends less money than it brings in through taxes in one year, that government has a _____.A.mandatory budgetB.budget surplusC.budget deficitD.discretionary budget
If a country wants to decrease its national debt as quickly as possible, what kind of budget will it most likely create?A.One that increases taxes and decreases spendingB.One that decreases taxes and decreases spendingC.One that increases taxes and increases spendingD.One that decreases taxes and increases spending
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