Directions: click on the graph in the window on the right and select Time Series to graph the U.S. public (federal) net outstanding debt as a percentage of GDP for the years 1940-2005. For Y Axis1 select Net Federal Debt, percentage of GDP. Use the figure to help determine which of the following statements are true. OA. The U.S. net federal debt to GDP ratio has been, for the most part, decreasing since the end of World War II, despite the fact that the U.S. economy was expanding and could afford a larger debt to GDP ratio. OB. As a result of the exceptionally large increases in U.S. government military expenditures in the first half of the 1940's, that were needed to win World War II, the net U.S. public debt to GDP ratio increased substantially, surpassing 100%. Since the late 1950's however, U.S. net federal debt to GDP ratio has fluctuated within a relatively small bend around the 40% line. OC. The net U.S. federal debt to GDP ratio follows a pattern that cannot have a meaningful interpretation. OD. Net federal debt in the U.S. changes according to the will of the president and Congress, who behave unpredictably; therefore, it will be impossible to understand what generates annual public deficits, which give rise to the net federal debt. U.S. Gross Net Federal Debt as a Percentage of GDP Q 10- 10 -10+ -10 Data source: U.S. Office of Management and Budget
Directions: click on the graph in the window on the right and select Time Series to graph the U.S. public (federal) net outstanding debt as a percentage of GDP for the years 1940-2005. For Y Axis1 select Net Federal Debt, percentage of GDP. Use the figure to help determine which of the following statements are true. OA. The U.S. net federal debt to GDP ratio has been, for the most part, decreasing since the end of World War II, despite the fact that the U.S. economy was expanding and could afford a larger debt to GDP ratio. OB. As a result of the exceptionally large increases in U.S. government military expenditures in the first half of the 1940's, that were needed to win World War II, the net U.S. public debt to GDP ratio increased substantially, surpassing 100%. Since the late 1950's however, U.S. net federal debt to GDP ratio has fluctuated within a relatively small bend around the 40% line. OC. The net U.S. federal debt to GDP ratio follows a pattern that cannot have a meaningful interpretation. OD. Net federal debt in the U.S. changes according to the will of the president and Congress, who behave unpredictably; therefore, it will be impossible to understand what generates annual public deficits, which give rise to the net federal debt. U.S. Gross Net Federal Debt as a Percentage of GDP Q 10- 10 -10+ -10 Data source: U.S. Office of Management and Budget
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Directions: click on the graph in the window on the right and select Time Series to
graph the U.S. public (federal) net outstanding debt as a percentage of GDP for
the years 1940-2005. For Y Axis1 select Net Federal Debt, percentage of GDP.
Use the figure to help determine which of the following statements are true.
O A.
The U.S. net federal debt to GDP ratio has been, for the most part,
decreasing since the end of World War II, despite the fact that the U.S.
economy was expanding and could afford a larger debt to GDP ratio.
OB. As a result of the exceptionally large increases in U.S. government
military expenditures in the first half of the 1940's, that were needed to win
World War II, the net U.S. public debt to GDP ratio increased substantially,
surpassing 100%. Since the late 1950's however, U.S. net federal debt to
GDP ratio has fluctuated within a relatively small bend around the 40%
line.
OC. The net U.S. federal debt to GDP ratio follows a pattern that cannot have
a meaningful interpretation.
O D.
Net federal debt in the U.S. changes according to the will of the president
and Congress, who behave unpredictably; therefore, it will be impossible
to understand what generates annual public deficits, which give rise to the
net federal debt.
U.S. Gross Net Federal Debt as a Percentage of GDP
10
-10+
-10
10
Data source: U.S. Office of Management and Budget
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