Explain the reason why the debt-to-GDP ratio in the United States is expected to explode between now and the year 2042
What will be an ideal response?
The debt-to-GDP ratio is expected to explode because government expenditures on transfer programs such as Social Security, Medicare, and Medicaid outpace revenues and are forecast to become more expensive. Expenditures on these programs will increase because the population is aging and health care costs are expected to rise rapidly. Expenditures on Medicaid, Medicare, and Social Security are projected to rise from 10.4% of GDP in 2012 to 18.3% of GDP in 2042. Also, the government has to pay interest on the new debt it issues, so net interest payments are projected to rise dramatically. Interest payments are projected to increase from 1.4% of GDP in 2011 to 11.8% of GDP in 2042.
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If an increase in income leads to a decrease in the demand for popcorn, then popcorn is
A) a necessity. B) a normal good. C) an inferior good. D) a neutral good.
Which of the following is an implicit cost of production?
A) interest paid on a loan to a bank B) wages paid to labor plus the cost of carrying benefits for workers C) rent that could have been earned on a building owned and used by the firm D) the utility bill paid to water, electricity, and natural gas companies