A government that currently has a budget deficit can balance its budget by__________ .
A) increasing tax revenues by more than it increases outlays
B) decreasing tax revenues by more than it decreases outlays
C) increasing both tax revenues and outlays by the same amount
D) decreasing tax revenues by more than it increases outlays

Question

Quizplus · Accepted Answer

Increasing tax revenues by more than it increases outlays will result in a surplus, which can be used to balance the budget. Decreasing tax revenues, as in option B and D, will only worsen the deficit. Option C suggests increasing both tax revenues and outlays by the same amount, which may not necessarily lead to budget balance.

A Government That Currently Has a Budget Deficit Can Balance