5
AssignmentMultiple Choice

Fiscal Policy: Spending

Question 5 • Personal Finance - EL3403

What does it mean to make "difficult choices" when creating a federal budget?

Answer
A
deciding how to keep interest rates on the national debt low
B
deciding which country to borrow from to finance spending
C
deciding how much to lend and how much to tax
D
deciding what will be funded and what will be cut

Explanation

A federal budget has limited resources, so policymakers must decide which programs and services will receive funding and which may be reduced or eliminated. That is what “difficult choices” means here. The correct choice is deciding what will be funded and what will be cut.

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