Question

In the 20th century, the ratio of the U.S. debt to GDP has

A.Risen in response to wars.
B.Been inversely related to the deficit to GDP ratio.
C.Fallen during wartime compared with prewar levels.
D.Fallen to its lowest levels during recessions or depressions.

Answer 1

The Debt/GDP ratio increased significantly during World War II due to heavy borrowing, later decreased from the 1950s to the 1970s, and rose again during periods of economic hardship such as the recessions of the early 1990s, 2008-2009, and in 2020.

Step-by-step explanation:

The question deals with the concept of the Debt/GDP ratio, which compares the total amount of national debt to the country's gross domestic product (GDP). During the 20th century, various financial events impacted this ratio. During World War II, the U.S. saw a significant increase in the Debt/GDP ratio as the government borrowed heavily to fund the war effort. The post-war period until the 1970s was marked by surpluses or small deficits, leading to a decrease in the Debt/GDP ratio. However, this trend reversed in the 1980s and early 1990s with larger deficits, causing the ratio to climb rapidly again. The ratio experienced a decline during the late 1990s due to budget surpluses but rose sharply during the recession of 2008-2009 and again in 2020.

Based on this information, the correct answer to the question is A. Risen in response to wars, as the Debt/GDP ratio increased significantly during World War II. The other options (B, C, and D) are not supported by the historical data provided.