Government and the Economy Unit Test

Question

4 of 174 of 17 Items

Question
Suppose governmental expenses are rising rapidly. Which strategy could the federal government use to solve this situation?(1 point)
Responses

Make cuts to defense and education spending, and then increase tax rates to reduce the effect of increasing expenses in the federal government.
Make cuts to defense and education spending, and then increase tax rates to reduce the effect of increasing expenses in the federal government.

Increase payouts for entitlements and decrease income and payroll taxes so that consumers are provided with more money to pay for increased medical costs.
Increase payouts for entitlements and decrease income and payroll taxes so that consumers are provided with more money to pay for increased medical costs.

Increase corporate and individual income tax rates to raise revenue, and then eliminate payments to state and local governments to cut other costs in the federal government.
Increase corporate and individual income tax rates to raise revenue, and then eliminate payments to state and local governments to cut other costs in the federal government.

Delay payments for the interest on the national debt and increase tax rates for payroll and corporate income taxes to raise funds for Medicare and Medicaid.

Answer 1

To address rapidly rising government expenses, the most effective strategy among the provided options would generally be to make cuts to defense and education spending, and then increase tax rates to reduce the effect of increasing expenses in the federal government.

This approach focuses on both reducing expenditures in certain areas while also increasing revenue through tax hikes, aiming for a balanced solution to the fiscal challenge posed by rising expenses.

The other options either increase expenditures (like increasing entitlement payouts) or propose measures that could exacerbate fiscal stress rather than alleviate it.