Question

Explain how each of the following events would affect the public debt or implicit liabilities of the U.S. government, other things equal. Would the public debt or implicit liabilities be larger or smaller if they occurred?

Answer 1

Following is the explanation

Step-by-step explanation:

A) Increase in the GDP growth rate means the public is earning more money which leads to more taxes and smaller public debt.

B) Retirees live longer means more pension and increase in implicit liabilities.

C) A decrease in tax revenue means more public debt.

D) Government borrowing to pay debt increase the public debt because the government has to pay the interest rate.