Question

One of the most important reasons to evaluate the financial performance of a government is to:

A. Determine if property taxes and other revenue sources should be increased.
B. Assign responsibility for success or failure of the government to certain parties.
C. Determine whether the government is accomplishing its mission.
D. Have an early warning of impending financial difficulty for a diverse set of decision makers.

Answer 1

Evaluating a government's financial performance is crucial for ensuring it accomplishes its mission, judiciously balances taxation and spending, and avoids excessive borrowing that could disrupt economic stability.

Step-by-step explanation:

One of the most important reasons to evaluate the financial performance of a government is to determine whether the government is accomplishing its mission. Governments gather revenue primarily through taxation, but raising taxes has ramifications, such as reducing the amount individuals have to spend and potentially altering behaviors in ways detrimental to the economy. Moreover, when government spending exceeds tax collections, it causes a budget deficit that may force the government to borrow, possibly affecting the private sector and overall financial stability.