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?

(1) The monetary policies pursued by the Fed need tightening.

(2) The national deficit is likely to decrease.

(3) The rate of inflation is likely to fall.

(4) The total national debt is likely to increase.

Question

Business

Bradyn Houston

Today, 10:37

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?

(1) The monetary policies pursued by the Fed need tightening.

(2) The national deficit is likely to decrease.

(3) The rate of inflation is likely to fall.

(4) The total national debt is likely to increase.

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Answers (1)

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Amiya Lloyd · Answer 1

(4) The total national debt is likely to increase

Explanation:

Deficit spending exceeds income because purchases are made. This happens to people and businesses, but usually this applies to governments. There was a mistake. It generates a budget shortfall when government expenditure exceeds government income. The sovereign debt is offset by the deficit every year.