Question

Assuming the federal budget is balanced, if the government increases taxes and does not change anything else, then _____. A. there should be a budget deficit. B. there will be a balanced budget. C. there should be a budget surplus. D. the government should stop issuing treasury bonds

Answer 1

Answer:

C, There should be a budget surplus

Explanation:

A budget surplus happens when there is more money coming in than going out. It can be due to increased taxes, a healthy economy growth or the effectiveness of government.

The surplus is usually spent on investments, improvements, or to pay off any outstanding debts.

When expenditures exceed income, the opposite of a surplus happens, which is known as a budget deficit.

A budget surplus in an indicator of a healthy economy.

Answer 2

Answer:

C. There should be budget surplus is the correct answer.

Explanation:

When the  income of the government exceeds the expenditures the it is considered to be in budget surplus. Budget surplus refers tot the financial states of governments and whether the government is managing its finances properly or not.

It is is not mandatory for the government to maintain budget surplus and if a there is no budget surplus doesn't mean that government is not functioning efficiently. The government can spend this surplus money on infrastructure. If the income is equal to the expenditure then it is called a balanced budget.  

So if the federal budget is balanced and government increases taxes the it would increase government earnings.