The US exited WWII with an enormous debt level, but was able to reduce it in the following decades. Which of the following enabled that to happen? a) increased tax revenues b) economic growth c)...
The US exited WWII with an enormous debt level, but was able to reduce it in the following decades. Which of the following enabled that to happen?
a) increased tax revenues
b) economic growth
c) reduction in military spending
d) the bowles-simpson commission
The best answer to this question is Option B. Option A is also a possible answer, but I would argue that Option B is better. The other two options are definitely not correct.
Option C cannot be true because US defense spending did not continually drop over the decades after WWII. Spending did of course drop right after WWII, but it went back up and stayed relatively high (though not as high as during WWII) because of the Cold War. Since spending did not constantly drop, this cannot have caused the reduction in the debt.
Option D is not correct because this commission did not exist until the 1990s. This means it could not have caused the debt to drop.
Option A could be the correct answer. As you can see in the link below, tax revenues did go up in the years after WWII. This would have helped cause the debt to go down. However, I would say that Option B is the better answer. Tax revenues were able to go up in large part because of economic growth. Because people and companies made more money, they were able to pay more in taxes. The economic growth caused the tax revenues to increase. Because of this, I think that Option B is the best answer.