9. Will the U.S. government go bankrupt? Aa Aa The following figure shows actual

Question

9. Will the U.S. government go bankrupt? Aa Aa The following figure shows actual data and projections from the Congressional Budget Office (CBO) on Medicare and Medicaid, Social Security, and other government spending in the United States of GDP 300x Total Actual Projected spnding Total rovenue 25% Medicare and Medicaid 20% 15% Social Security (including 10% 1960 1970 1980 1990 20O0 2010 2020 2030 2040 2050 2060 Year Spending and Revenue Projections by Category as a Percentage of GDP Source: Congressional Budget Office, Long-Term Budget Outlook, 2010. Which of the following statements are supported by this figure? Check all that apply XMedicare and Medicaid spending is expected to grow at a faster rate than GDP ? The size of the government deficit is projected to grow over the next few decades ? Government spending on welfare programs other than Social Security, Medicare, and Medicaid is projected to grow at a faster rate than GDP What is the implication of the CBO's projection? The only way to solve the problem of rising national debt is to increase the rate at which the economy grows The government must reduce its spending, raise taxes, or both in order to prevent the debt-to-GDP ratio from soaring The government should reduce the spending on Medicare and Medicaid but increase the spending on other welfare programs, such as unemployment insurance

Explanation / Answer

The government must reduce its spending, raise taxes, or both in order to prevent the debt-to-GDP ratio from soaring

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