A state government finds it has a shortage of money in the budget. State officials would like to reduce the state's short term b
udget gap. Which of the following options might be possible under the United States Constitution? Printing currency to pay state employees
Raising money by granting titles of honor to donors
Closing public parks to save money
Placing a heavy tax on the import of goods manufactured outside the state
The correct answer is: "Placing a heavy tax on the import of goods manufactured outside the state".
The solution provided consists on implementing a protectionist policy in international trade affairs, which is Constitutional.
Tax collection will help directly to raise funds that will decrease the budget deficit. Moreover, if taxes are placed on foreign imports, this will favour domestic producers, that would be able to sell higher quantities of their products which previously had difficulties to compete in prices with cheap imports. This increase in domestic production, requires more employees, more people are earning a salary and paying income taxes which are contributing to increase the national tax collection figures and hence, to reduce the deficit.
