If government spending increases and taxes decrease:
A)implicit liabilities will increase.
B)implicit liabilities will decrease.
C)the public debt will increase.
D)the public debt will decrease.

Question

Quizplus · Accepted Answer

When government spending increases and taxes decrease, the budget deficit increases, which in turn increases the public debt. Therefore, the correct answer choice is (C) the public debt will increase. Implicit liabilities, which refer to future obligations such as social security payments, are not directly impacted by changes in current government spending and tax policies.

If Government Spending Increases and Taxes Decrease