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Chapter 30: Q.27 (page 742)

What has been the general pattern of U.S. budget deficits in recent decades?

Short Answer

Expert verified

Except for the years 1998 and 2001, the United States has consistently had budget deficit.

Step by step solution

01

Step 1. Concept of budget deficit

When the expenditure incurred by government is more than the tax revenue collection, then there is said to be a budget deficit.

02

Step 2. Explanation

If the general trend of the US deficit is seen, it may be concluded that the US economy has always been in a deficit situation. Only three years from the 1970s era, as well as the latter decade of the 1990s, did the economy have a surplus; otherwise, the economy was in deficit. The big deficit occurred during a period when the US economy was hit by recession in previous years.

As a result, it may be claimed that the US economy has been confronting increasing fiscal deficits in recent decades.

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Most popular questions from this chapter

If a government runs a budget deficit of \(10 billion dollars each year for ten years, then a surplus of \)1 billion for five years, and then a balanced budget for another ten years, what is the government debt?

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Is it possible for a nation to run budget deficits and still have its debt/GDP ratio fall? Explain your answer. Is it possible for a nation to run budget surpluses and still have its debt/GDP ratio rise? Explain your answer.

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What is the difference between a progressive tax, a proportional tax, and a regressive tax?
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