When a Government Has a Budget Deficit and Has Reduced

question 121

Multiple Choice

When a government has a budget deficit and has reduced its spending, what other step can be taken to generate more revenue, besides issuing government bonds?

• A) reduce unemployment
• B) raise interest rates
• C) increasing exports
• D) raise taxes

---

Definitions:

Pretax Accounting Income

Income earned by a business before taxation has been deducted, as recorded in its financial accounts.

Deferred Tax Liabilities

Future tax payments due to temporary differences between financial accounting and tax accounting practices.

Deferred Tax Assets

Assets on a company's balance sheet that may be used to reduce future tax liability resulting from temporary timing differences between accounting and tax treatments.