As you're checking out the online edition of your local newspaper, you quickly scan a report in the business section that says government spending will again exceed tax revenues in the current year. What does this mean for the economy?
A) The total national debt is likely to increase.
B) The national deficit is likely to decrease.
C) The rate of inflation is likely to fall.
D) The monetary policies pursued by the Fed need tightening.

Question

Quizplus · Accepted Answer

When its tax revenues fall short of its expenditures, the federal government runs a deficit. Since the national debt is the sum of all deficits, running another deficit will increase the debt.

As You're Checking Out the Online Edition of Your Local