Is this answer right? (1 Viewer)

[lolitsme]

I got this question from past papers and i was wondering if the answer is right.

Which of the following methods could be used by the Federal government to finance a budget deficit?

A) Borrowing funds from the RBA
B) Purchasing second hand government securities from overseas markets
C) Increasing the level of government taxation and reducing government spending
D) Buying commonwealth government securities from the domestic financial market.

I got C but the answer says A? is the two answers or am i just missing something

 

[timw7845]

I got this question from past papers and i was wondering if the answer is right.

Which of the following methods could be used by the Federal government to finance a budget deficit?

A) Borrowing funds from the RBA
B) Purchasing second hand government securities from overseas markets
C) Increasing the level of government taxation and reducing government spending
D) Buying commonwealth government securities from the domestic financial market.

I got C but the answer says A? is the two answers or am i just missing something

usually there are two correct answers and theres more of a right one..

a and c are both right.. but govts usually avoid raising taxes unless its the last resort as its unpopular and leads to them being turfed...

so yes a is the "best" way to pay off deficit..