Which of the following statements best explains why the red bar goes up when the blue goes up?

Equivalent spending and taxing does not allow for debt reduction.

Higher spending than taxing results in a deficit, which contributes to more debt.

Higher taxing than spending results in a deficit, which contributes to more debt.

Higher taxing and higher spending result in more debt

Question

Meghan Solomon

Business

21 November, 07:14

Which of the following statements best explains why the red bar goes up when the blue goes up?

Equivalent spending and taxing does not allow for debt reduction.

Higher spending than taxing results in a deficit, which contributes to more debt.

Higher taxing than spending results in a deficit, which contributes to more debt.

Higher taxing and higher spending result in more debt

+2

Answers (1)

Know the Answer?

Maddison Gentry · Answer 1

Answer: Higher spending than taxing results in a deficit, which contributes to more debt.

Explanation:

Here the red bar is referred to the debt and the blue bar is referred to the spending. When the government spending is more it decreases the government revenue and creates a deficit in the funds. When there is deficit it means the government borrows funds for spending which increases the debts.

Government spending to improve the status of the economy in the country. It Invests is various activities for growth and development purpose. Only on collecting high taxes the revenue of the government will increase. When taxes collected are low the government revenue is also low.