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Which of the following is not an example of how to create a balanced budget?


Increase revenue by raising taxes


Cut spending on government organizations such as the United States Postal Service or NASA.


Increase government programs such as unemployment insurance


Cut government subsidies for industries such as technology or agriculture.

Expert Answers

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Of these options, the one that is least likely to result in a balanced budget is the one you have labeled Option B (they’re out of order, so I’m not sure if that is the right label).  Increasing government spending on things like unemployment insurance is not a way to create a balanced budget.  Let us examine why this is so.

First, we must understand what a balanced budget is.  It is a budget in which the government spends no more money than it takes in.  In other words, revenues from taxes and such must be equal to expenditures.  In our current situation, we have large budget deficits.  This means that our spending is much greater than our revenues.  To balance the budget, we must A) increase revenues and/or B) decrease spending.  All of the options except Option B do one of these things.

Option A, as it plainly states, increases revenues by raising taxes.  Option C reduces spending by cutting the budgets of agencies like NASA.  Option D cuts subsidies and subsidies are a form of spending.  By contrast, Option B increases spending.  An increase in unemployment insurance payments is an increase in spending.  When we are running a deficit, we are not likely to balance the budget by increasing spending.  Therefore, Option B is the correct answer.

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