Government Spending, Taxes, and Fiscal Policy-End of Chapter ProblemA political candidate has written an op-ed piece in which she claims that the U.S. government debt has continually grown and isout 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 constantlyspending more than she earns, thus racking up large amounts of consumer debt.Gross Government DebtTrillions of Dollars$24$20$16$12$8$$019801990201020202000Stevenson/Wolfers, Principles of Economics, 1e, 2020 Worth PublishersIn 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 debtrelative to the size of the economy.

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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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