Question : What is the purpose of a budget surplus?
Option 1: To pay down the national debt
Option 2: To increase government spending
Option 3: To decrease taxes
Option 4: To encourage economic growth
Correct Answer: To pay down the national debt
Solution : The correct answer is (a) To pay down the national debt.
A budget surplus occurs when the government's revenues exceed its expenditures, resulting in an excess of funds. One of the primary purposes of a budget surplus is to use the extra funds to pay down the national debt. By reducing the debt, the government can decrease the amount of money it owes to lenders and potentially save on interest payments.
Paying down the national debt has several potential benefits. It can help improve the overall financial health of the government by reducing interest payments and freeing up funds for other priorities. It can also enhance investor confidence and contribute to long-term fiscal stability.
Question : What is the purpose of a stimulus package?
Option 1: To increase government spending
Option 2: To decrease taxes
Option 3: To encourage economic growth
Option 4: To pay down the national debt
Question : What is the purpose of a government subsidy?
Option 1: To encourage economic growth in a particular sector
Option 2: To decrease government spending
Option 3: To increase taxes
Question : What is the purpose of a debt ceiling?
Option 1: To limit the amount of debt the government can take on
Option 2: To encourage economic growth
Option 4: To decrease government spending
Option 1: To reduce government debt
Option 3: To stimulate economic growth
Option 4: To provide a surplus for future years
Question : Expansionary fiscal policy involves:
Option 1: Decreasing government spending and increasing taxes
Option 2: Increasing government spending and increasing taxes
Option 3: Decreasing government spending and decreasing taxes
Option 4: Increasing government spending and decreasing taxes
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