If the public debt increased by the same amount each year during the past three years, then
A) the U.S. government must have operated with the same budget surpluses during the past three years.
B) the U.S. government must have experienced budget surpluses that increased by the same amount each of the past three years.
C) the U.S. Treasury must have issued securities to fund a flow of government spending that exceeded a flow of tax revenues by the same amount during each of the past three years.
D) during each of the past three years, the U.S. Treasury must have bought back the same amount of securities that had previously been issued to cover deficits experienced more than three years ago.

Question

Quizplus · Accepted Answer

If the public debt increased by the same amount each year during the past three years, it implies that the government spent more money than it received in taxes by the same amount each year. The government would have to issue securities (bonds) to cover the deficit spending, which would result in an increase in the public debt. Therefore, the U.S. Treasury must have issued securities to fund a flow of government spending that exceeded a flow of tax revenues by the same amount during each of the past three years. Both options A and B are incorrect because they assume budget surpluses, which is the opposite of what is happening if the public debt is increasing. Option D is also incorrect because it talks about buying back securities, which would decrease the public debt, but the question states that the debt is increasing.

If the Public Debt Increased by the Same Amount Each