Question

Which of the following statements is true about the federal budget?

1) The federal budget had a surplus.
2) The federal budget had not changed.
3) The deficit had begun to decline.
4) The deficit was higher than ever.

Answer 1

The federal government experienced budget surpluses from 1998 to 2001 but returned to deficits in the 2000s, with the largest deficit occurring in 2009 when spending exceeded tax revenue by $1.4 trillion.

Step-by-step explanation:

Regarding the federal budget, the statement that must be considered is the history of budget deficits and surpluses. While it is true that the federal government has run budget deficits for many decades, it is important to recognize that the United States did experience budget surpluses from 1998 to 2001.

However, the budget returned to a deficit in the early 2000s and incurred especially deep deficits during the 2008-2009 recession. For example, in 2009, the federal government had its largest budget deficit ever, spending $1.4 trillion more than it collected in taxes, which was roughly 10% of the U.S. GDP at that time.