Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
To stimulate economic growth by increasing consumer spending
B
To reduce the national debt by decreasing the deficit
C
To increase government revenue without affecting public services
D
To lower interest rates and encourage investment
Understanding the Answer
Let's break down why this is correct
Answer
When a government increases taxes and reduces public spending, it often does this to manage or reduce national debt. National debt is the total amount of money the government owes, and if it gets too high, it can create problems for the economy. By raising taxes, the government collects more money, which can help pay off existing debt or prevent it from growing. At the same time, cutting public spending means the government is using less money on services and programs, which can also help balance the budget. For example, if a country is spending a lot on healthcare but has a high national debt, it might raise taxes on income and reduce healthcare funding to make sure it can pay back what it owes.
Detailed Explanation
The government wants to lower its national debt. Other options are incorrect because Some might think that raising taxes helps people spend more; It's a common belief that increasing taxes can boost government income without affecting services.
Key Concepts
Fiscal Policy
National Debt
Economic Growth
Topic
Fiscal Policy and National Debt
Difficulty
medium level question
Cognitive Level
understand
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