True or false? Governments engaged in deficit spending are incurring expenditures larger than tax revenues.
Why Should Citizens Pay Taxes?:
Paying taxes is one of the primary responsibilities of every citizen within a country. Citizens should pay taxes to the government because taxes enable the government to provide public goods such as security. If people fail to pay taxes, the government will lack funds; thus, it will not provide public goods since it does not have another significant source of income.
Answer and Explanation: 1
- The above statement is true.
Deficit spending refers to a situation in which an entity spends more than it earns within a specific period. Deficit spending is a bad behavior because it increases the level of debts in an economy. A government can enter into deficit spending when it starts to incur more expenses than its tax revenue. This is because tax revenue is the primary source of government revenue. Therefore, it is correct when one argues that the above statement is true.
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fromChapter 11 / Lesson 14
Examine the budget deficit definition and the causes of budget deficits. Find out how government budget deficits affect the economy and learn relevant history.