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
Related questions
Question
I'm studying for an exam and this question is honestly going right over my head. I would love a bit of help!
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:
9781285165912
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:
9781305971509
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning