Chapter 12 Homework

1. (Changing Budget Priorities) What spending category claimed the largest share of federal outlays during the 1960s? How about during the most recent decade?

2. (Chronic Deficits) Why has the federal budget been in deficit in all but 14 years since 1929? 3. (Federal Debt) What has happened to the federal debt since 2008 as measured relative to GDP?

4. (Net Public Debt) What's the level of net public debt (for federal, state, and local governments) relative to U.S. GDP? How does the U.S. measure compare with that of other major economies?

5. (Crowding-Out

and Capital Formation) In earlier chapters, we've seen that the government can try to increase GDP in the short run by running a budget deficit. What are some long-term effects of deficit spending?

6. (Sustainability of Federal Debt) Are large federal deficits and a growing federal debt sustainable? What can be learned from the experiences of other countries?