A political candidate has written an op-ed piece in which she claims that the U.S. government debt has continually grown and is out of control. She includes the accompanying graph to support her argument. She further argues that the government can't sustain this level of debt by comparing it to an individual who is constantly spending more than she earns, thus racking up large amounts of consumer debt.
A political candidate has written an op-ed piece in which she claims that the U.S. government debt has continually grown and is out of control. She includes the accompanying graph to support her argument. She further argues that the government can't sustain this level of debt by comparing it to an individual who is constantly spending more than she earns, thus racking up large amounts of consumer debt.
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 19E
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Question
![Government Spending, Taxes, and Fiscal Policy-End of Chapter Problem
A political candidate has written an op-ed piece in which she claims that the U.S. government debt has continually grown and is
out of control. She includes the accompanying graph to support her argument.
She further argues that the government can't sustain this level of debt by comparing it to an individual who is constantly
spending more than she earns, thus racking up large amounts of consumer debt.
Gross Government Debt
Trillions of Dollars
$24
$20
$16
$12
$8
$
$0
1980
1990
2010
2020
2000
Stevenson/Wolfers, Principles of Economics, 1e, 2020 Worth Publishers
In what ways might the political candidate's arguments be misleading?
Recent research suggests that government debt doesn't matter.
Government debt differs from household debt in that the government has ways of handling debt that households lack.
The graph depicts gross government debt, whereas what matters is net government debt.
The graph depicts the absolute size of the debt, whereas the sustainability of the debt depends on the size of the debt
relative to the size of the economy.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F14044b42-4c29-4bd0-8d18-a5541d1f13fc%2F5f8dc6f9-471b-466f-b0c3-64310c024f3c%2Fnj6q69_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Government Spending, Taxes, and Fiscal Policy-End of Chapter Problem
A political candidate has written an op-ed piece in which she claims that the U.S. government debt has continually grown and is
out of control. She includes the accompanying graph to support her argument.
She further argues that the government can't sustain this level of debt by comparing it to an individual who is constantly
spending more than she earns, thus racking up large amounts of consumer debt.
Gross Government Debt
Trillions of Dollars
$24
$20
$16
$12
$8
$
$0
1980
1990
2010
2020
2000
Stevenson/Wolfers, Principles of Economics, 1e, 2020 Worth Publishers
In what ways might the political candidate's arguments be misleading?
Recent research suggests that government debt doesn't matter.
Government debt differs from household debt in that the government has ways of handling debt that households lack.
The graph depicts gross government debt, whereas what matters is net government debt.
The graph depicts the absolute size of the debt, whereas the sustainability of the debt depends on the size of the debt
relative to the size of the economy.
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