Question

Many communities today are concerned with their local government’s ability to appropriately manage the taxes it collects. If a government doesn’t use all of the tax money it collects in taxes on existing expenditures, it may end up with extra money, called surplus. Which of the following could result in a county government budget in surplus?
a.
The government gives $100,000 to build and maintain a new sight-seeing attraction without adjusting existing expenditures.
b.
The government lowers sales and property taxes to satisfy taxpayers without adjusting expenditures.
c.
The government gives financial assistance to a neighboring county without adjusting taxes.
d.
The government reduces public transportation costs by switching to propane-run buses without adjusting taxes.

Answer 1

Answer: d.

Explanation: A budget surplus occurs when revenues exceed expenditures. Switching to cheaper propane-run buses lowers expenditures while taxes (revenues) stay the same, producing a surplus. The other choices increase spending or reduce revenue and would move the budget toward a deficit.