Which of the Following Federal Government Actions Would Make Sense

question 76

Multiple Choice

Which of the following federal government actions would make sense if a tax system fails to provide sufficient tax revenue?

• A)Only issue treasury bonds.
• B)Only cut funding to various federal projects.
• C)Only increase federal spending.
• D)Issue treasury bonds and cut funding to various federal projects but not increase federal spending.
• E)None of the choices are correct.

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Definitions:

Stock Investments

Financial assets consisting of shares in companies, representing ownership and possibly entitling the shareholder to dividends.

Debt Investments

Financial assets involving the loan of money by an investor to a borrower, typically with the expectation of receiving interest income in addition to principle repayment.

Equity Method

An accounting technique used to record investments in other companies, where the investment is accounted for based on the investor’s share of the investee's equity.

Stock Investments

Financial assets consisting of stakes in companies through the purchase of common or preferred stock shares, with the expectation of earning dividends or capital gains.