📚 Learning Guide
Fiscal Policy and National Debt
easy

Which of the following actions can the government take as part of fiscal policy to help reduce national debt? Select all that apply.

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Choose the Best Answer

A

Increasing taxes

B

Decreasing government spending

C

Increasing subsidies to businesses

D

Cutting public services

E

Borrowing more funds

Understanding the Answer

Let's break down why this is correct

Answer

Fiscal policy refers to how the government uses its spending and tax policies to influence the economy. To help reduce national debt, the government can take actions like cutting unnecessary spending or increasing taxes. For example, if the government decides to reduce spending on certain programs, it can save money that can then be used to pay off debt. Additionally, raising taxes can bring in more revenue, which can also contribute to reducing the debt. These actions can help create a balanced budget, making it easier for the government to manage and eventually lower its national debt.

Detailed Explanation

To reduce national debt, the government needs to either increase revenue or decrease expenses. Other options are incorrect because Some might think raising taxes helps pay off debt; Cutting spending seems like a good idea, but it can hurt important services.

Key Concepts

Fiscal Policy
National Debt
Government Spending
Topic

Fiscal Policy and National Debt

Difficulty

easy level question

Cognitive Level

understand

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