If a Government Were to Find That It Cannot Raise

question 108

Multiple Choice

If a government were to find that it cannot raise taxes any further, and that it cannot borrow any further from financial markets, the government:

• A)Cannot increase its spending any further
• B)Can increase spending by having the central banks purchase its bonds
• C)Is in default
• D)Can decrease the amount of money in circulation

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, providing a more useful tool for performance evaluation.

Employee Salaries And Wages

Refers to the total payments made to employees for the work they have done, inclusive of overtime, bonuses, and other compensations.

Flexible Budget

A budget that adjusts or flexes for changes in the volume of activity, providing a more useful tool for performance evaluation than a static budget.

Other Expenses

Costs that are not directly related to the production of goods or services, such as administrative and marketing expenses.