Final answer:
Government spending as a percentage of GDP rose from the 1960s through the mid-1970s but started to decline through the 1990s, mainly due to reductions in defense spending and federal interest payments while tax collections increased.
Step-by-step explanation:
The question asks about the change in government spending as a percentage of the overall economy, or Gross Domestic Product (GDP), between 1979 and 1990. In the early 1960s, government spending by state and local governments was about 10% of GDP which increased to between 14-16% by the mid-1970s. By the 1980s, total federal spending was ranging between about 18% and 22% of GDP. However, from 1990 to 2000, government spending as a share of GDP declined steadily, with a significant reduction in defense spending from 5.2% of GDP in 1990 to 3.0% in 2000. Additionally, interest payments by the federal government decreased by about 1.0% of GDP while federal tax collections increased.