Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

What action does the U.S. Treasury take when it needs to acquire funds?

1. Increases taxes

2. Issues new currency

3. Sells securities

4. Reduces government spending

The correct answer is: Sells securities

When the U.S. Treasury needs to acquire funds, it sells securities, which includes Treasury bills, notes, and bonds. Selling these securities is a primary method through which the government raises funds to finance operations, pay debts, and fund various programs. Investors, including individuals, institutions, and foreign governments, purchase these securities as they are considered a safe investment. The process of selling securities is essentially borrowing money from the public; in return for their investment, the Treasury promises to pay back the principal amount with interest at a later date. Other options, such as increasing taxes or reducing government spending, are governmental fiscal policy tools but do not directly generate immediate funds in the manner that selling securities does. While issuing new currency is technically possible, it can lead to inflation and is not a common or preferred method for raising funds. Thus, selling securities is the most accurate and direct action taken by the U.S. Treasury to acquire funds.