American Government Questions And Answers

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Student’s Name: Professor’s Name: Course: Date: American Government Short Questions and Answers How is the Federal Government financed? Through tax revenues and fees, the Federal Government raises trillions of dollars annually. Some of the taxes raised are used to finance specific government projects, whereas others fund the government in a broad spectrum. In case the taxes are insufficient to finance the Federal Government’s expenditure, the U.S. Treasury is forced to borrow money to cater for the deficit. What effect does borrowing have on the federal budget and the nation's economy? Through borrowing, the government can obtain money that provides an economic stimulus for the country and helps pay off the deficiencies in the budget due to overspending, or in crises. However, the effect is that the country’s economy may suffer in some instances where continued borrowing results in future deficits. Furthermore, higher interest rates are incurred when paying for the borrowed money. What are the four limits on the power to tax as set out in the Constitution? As enshrined in the American constitution, the four limits on the power to tax are as follows; the tax imposed by the federal government must be for public use only and not for any other purpose. Secondly, the tax cannot be used on exports (Kulik et al. 16). Third, the direct taxes must be dispensed by the same token among the states. Lastly, there must be a set rate for all the indirect taxes nationwide. How does the government borrow money? The Federal Government does not request for loans but "issues debt,” meaning that it sells securities such as bonds, Treasury bills and

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