Suppose that U.S. debt is $6 trillion at the beginning of the fiscal year. During the fiscal year, government spending is $1.5 trillion and tax revenues are $2.0 trillion. What is the change in the U.S. debt at the end of the fiscal year?

a) $2 trillion
b) $0.5 trillion
c) $4 trillion
d) $3.5 trillion

Question

24-10-2023
Business

High School

Thank you for visiting Suppose that U S debt is 6 trillion at the beginning of the fiscal year During the fiscal year government spending is 1 5 trillion. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!

Suppose that U.S. debt is $6 trillion at the beginning of the fiscal year. During the fiscal year, government spending is $1.5 trillion and tax revenues are $2.0 trillion. What is the change in the U.S. debt at the end of the fiscal year?

a) $2 trillion
b) $0.5 trillion
c) $4 trillion
d) $3.5 trillion

Answer :

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nataliyachhawarese41 nataliyachhawarese41 · Answer 1 · 2024-06-26T09:40:13-04:00

Final answer:

The change in U.S. debt at the end of the fiscal year is a decrease of $0.5 trillion, making the new debt total $5.5 trillion, as the government's spending and transfers were $1.5 trillion and tax revenues were $2.0 trillion. This means the correct answer to the change in U.S. debt at the end of the fiscal year is option b) $0.5 trillion.

Explanation:

If the U.S. debt is $6 trillion at the beginning of the fiscal year and during the fiscal year, the government has spending and transfers totaling $1.5 trillion and tax revenues of $2.0 trillion, the change in U.S. debt can be calculated as follows:

Change in debt = Spending and transfers - Tax revenues

Change in debt = $1.5 trillion - $2.0 trillion

Change in debt = -$0.5 trillion

Since the government has spent less than its tax revenue, this results in a decrease in debt. Therefore, the U.S. debt at the end of the fiscal year would be $6 trillion - $0.5 trillion = $5.5 trillion.