When Congress and the president agree on federal budgets that run significant deficits over many years, what are the likely economic consequences?

Question

Quizplus · Accepted Answer

When federal budgets run significant deficits over many years, it can lead to an increase in government debt. To finance this debt, the government may need to offer higher interest rates to attract investors to buy government bonds and securities. Higher interest rates can have ripple effects on the economy, such as increasing the cost of borrowing for consumers and businesses, which can slow down economic growth.

Answer: C
 When Congress and the president agree on federal budgets that run significant deficits over many years, taxes are likely to increase to pay for government spending. These tax increases may disproportionately affect lower-income individuals and exacerbate income inequality. Additionally, higher taxes can reduce incentives to work and invest, which can further slow economic growth.

When Congress and the President Agree on Federal Budgets That