If the Federal Government Is Running a Budget Deficit

question 49

Multiple Choice

If the federal government is running a budget deficit,

• A) the national debt will decline.
• B) it will have to either raise taxes or reduce expenditures next year.
• C) the U.S. Treasury will finance the deficit by issuing additional bonds.
• D) the supply of money will increase and the general level of prices will rise.

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Definitions:

Past Income

The amount of money earned in preceding periods, often used to assess financial stability or creditworthiness.

Inheritance

Assets received from someone who has died, transferring wealth or obligations from the deceased to their legal heirs or beneficiaries.

Federal Governments

A system of government where power is divided between a national (federal) government and various regional governments.

Command Economy

A system of economy in which all determinations about the generation and distribution of products and services are made by the state or central authority.