Federal Budget Deficit Could Shrink to $1 Trillion This Year

The U.S. budget deficit could shrink this year as federal spending on Covid-19 aid slows and the economy rebounds. The federal deficit is expected to increase over the next decade. The Fed plans multiple interest rate hikes.—cnn.com

Answer the following questions to check your understanding of the story.

What does the news clip suggest is contributing to a shrinking federal budget deficit in 2022?

The federal budget deficit is shrinking in 2022 because _____________.

a) debt interest is increasing, and transfer payments are decreasing

b) government expenditure on goods and services are decreasing and debt interest is increasing

c) government expenditures on goods and services are decreasing and taxes are increasing

d) transfer payments are decreasing, and taxes are increasing

What is the effect of an increasing government budget deficit over the next decade on U.S. investment and economic growth?

An increasing government budget deficit ______________.

a) increases investment and encourages economic growth

b) increases investment, but has no effect on economic growth

c) decreases investment and slows economic growth

d) decreases investment, but has no effect on economic growth

Federal Budget Deficit Could Shrink to $1 Trillion This Year

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