Question

Imagine the federal government has a national debt of $10.2 trillion. Congress's budget for the coming year includes a spending projection of $4.2 billion. Tax revenue projects $3.8 billion. Which fiscal policy should Congress adopt to avoid increasing the national debt?(A) cut public programs(B) increase taxes(C) lower discounts(D) reduce open-market operations

Answer 1

Answer:

(D) reduce open-market operations

Explanation:

Acording to my research, the best policy that Congress can adopt in order to avoid increasing the national debt would be to reduce open-market operations. This the central banks sell government securities so the system is left with less liquidity which lowers demand as well as lowering economy prices.

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