If Government Adhered Strictly to the Idea of an Annually

question 74

Multiple Choice

If government adhered strictly to the idea of an annually balanced budget,then during a recession,

• A)expenditures and tax collections would remain unchanged.
• B)both expenditures and tax rates would have to be decreased.
• C)both expenditures and tax rates would have to be increased.
• D)expenditures would have to be increased and/or tax rates decreaseD.
• E)expenditures would have to be reduced and/or tax rates increased.

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Definitions:

Previously-taxed Dollars

Funds that have already been subject to taxation, not requiring further tax upon withdrawal or transfer.

Qualified Pension Plan

A retirement plan that meets the requirements of the Internal Revenue Code and ERISA, offering tax advantages to the employer and employee.

Nontaxable

refers to income or financial transactions that are not subject to tax by the government.

Traditional IRAs

Retirement savings accounts that allow individuals to make pre-tax contributions, deferring taxes until the money is withdrawn.