Final answer:
The claim that the national debt has consistently increased at an annual rate of 8.5% since 1938 is false when considering it as a share of GDP. Historical data shows varying budget deficits and surpluses that affect the debt/GDP ratio differently over time.
Step-by-step explanation:
The statement that since 1938, the national debt has increased at an average annual rate of 8.5% is false, especially when considering the debt as a share of GDP (Gross Domestic Product). While in nominal dollars the debt has indeed increased, it is not accurate to state a consistent 8.5% annual growth rate without qualifying the context. Annual budget deficits do not always mean that the debt/GDP ratio is rising. During the 1960s and 1970s, the government ran small deficits but the debt grew more slowly than the economy, so the debt/GDP ratio declined. However, substantial debts were accumulated in peacetime during the 1980s and early 1990s, followed by surpluses from 1998 to 2001, and then a return to deficits since 2002, with very large deficits occurring during the recession of 2008 and 2009.