Prior to the COVID-19 pandemic and resulting financial crisis, the US government was already on a deficit spending path that would increase the federal debt to unprecedented levels. The first round of government spending that exceeded $2 trillion dollars only added to that deficit. Which of the following is not true? The "interest on the debt" category of federal government spending will increase. The federal government debt will exceed U.S. GDP in 2020 by a higher percentage than it did in 2019. A balanced budget amendment, that prevents government spending from exceeding tax revenues, would have made government stimulus spending easier during this time. Increased unemployment numbers will add to the deficit by both increasing government spending and decreasing government tax revenue from households and business firms. The opportunity cost of the "interest on the debt" will be reduced funding to other programs.
Prior to the COVID-19 pandemic and resulting financial crisis, the US government was already on a deficit spending path that would increase the federal debt to unprecedented levels. The first round of government spending that exceeded $2 trillion dollars only added to that deficit. Which of the following is not true? The "interest on the debt" category of federal government spending will increase. The federal government debt will exceed U.S. GDP in 2020 by a higher percentage than it did in 2019. A balanced budget amendment, that prevents government spending from exceeding tax revenues, would have made government stimulus spending easier during this time. Increased unemployment numbers will add to the deficit by both increasing government spending and decreasing government tax revenue from households and business firms. The opportunity cost of the "interest on the debt" will be reduced funding to other programs.
Chapter17: Federal Deficits, Surpluses, And The National Debt
Section: Chapter Questions
Problem 7SQP
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Transcribed Image Text:Prior to the COVID-19 pandemic and resulting financial crisis, the US government was
already on a deficit spending path that would increase the federal debt to unprecedented
levels. The first round of government spending that exceeded $2 trillion dollars only
added to that deficit. Which of the following is not true?
The "interest on the debt" category of federal government spending will increase.
The federal government debt will exceed U.S. GDP in 2020 by a higher percentage than it did in
2019.
A balanced budget amendment, that prevents government spending from exceeding tax
revenues, would have made government stimulus spending easier during this time.
Increased unemployment numbers will add to the deficit by both increasing government
spending and decreasing government tax revenue from households and business firms.
The opportunity cost of the "interest on the debt" will be reduced funding to other programs.
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