Which of the following helped transform the budget deficits of the early 1990s into surpluses later in the decade?
A) Rapid growth in the number of persons moving into the retirement phase of life during the 1990s
B) A reduction in defense expenditures following the end of the Cold War
C) A 1997 increase in the tax rate imposed on income derived from capital gains
D) A reduction in Social Security and health-care benefits during the 1990s

Question

Quizplus · Accepted Answer

The reduction in defense expenditures following the end of the Cold War is the most significant factor in transforming the budget deficits of the early 1990s into surpluses later in the decade. It helped in lowering government spending and cutting the deficit. Other options such as increasing the tax rate on income derived from capital gains or reducing Social Security and health-care benefits may have helped, but it is not as significant as the reduction in defense expenditures. The retirement phase of life may have affected the economy but would not necessarily impact the budget deficits.

Which of the Following Helped Transform the Budget Deficits of the Early