THE ROARING 20S 1920 1929
AMERICAN ECONOMY IN THE 1920S
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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purchasing power will increase and economic growth will be stimulated
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only the National Government can operate businesses efficiently
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the National Government should turn its revenue over to the states
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lower interest rates will encourage investment
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Detailed explanation-1: -Understanding the National Deficit A budget deficit occurs when money going out (spending) exceeds money coming in (revenue) during a defined period. In FY 2022, the federal government spent $6.27 trillion and collected $4.90 trillion in revenue, resulting in a deficit.
Detailed explanation-2: -A budget deficit implies a reduction in taxes and an increase in government spending, which results in an increase in the aggregate demand of the country and subsequent economic growth, ceteris paribus.
Detailed explanation-3: -When a government’s expenditures on goods, services, or transfer payments exceed their tax revenue, the government has run a budget deficit. Governments borrow money to pay for budget deficits, and whenever a government borrows money, this adds to its national debt.
Detailed explanation-4: -This means that to help stabilize the economy, the government should run large budget deficits during economic downturns and run budget surpluses when the economy is growing. These are known as expansionary or contractionary fiscal policies, respectively.