Question

If an economic crisis were to occur that caused a significant decline in the projected tax revenue for the biennium, the state legislature would likely deal with the shortfall by taking which steps

Answer 1

If a country is going through financial difficulty, there are several steps they can take including:

• Reducing spending
• Delaying interest payments
• Using cash reserves

If a country sees that its taxes will not be enough to cover its obligations, it can reduce the amount it spends on goods and services so as to reduce its obligations.

Country can also increase the time taken to pay off debts so that they can divert cash to needed areas whilst waiting for things to be better.

Country can use cash reserves that it accumulated in one form or the other to weather the storm of reduced taxes.

In conclusion, the government can deal with tax shortage in several ways.

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