United States Debt Quiz

Explanation
The term "debt ceiling" refers to the maximum borrowing power of a governmental entity. It is a limit set by the government on the amount of money it can borrow to finance its operations and pay its obligations. This limit is usually set by legislation and serves as a control mechanism to prevent excessive borrowing and ensure fiscal responsibility. When the debt ceiling is reached, the government must either reduce spending or increase revenue to avoid defaulting on its debts.

Explanation
The statement suggests that the U.S. government is considering increasing the debt ceiling, which implies that the current debt ceiling is nearly at 15 trillion. Therefore, the statement is true.

Explanation
Aug. 2 is the deadline for action by Congress to raise the government's $14.3 trillion debt limit.

Explanation
Without action by that date, the Treasury will be unable to pay all its bills, possibly triggering a default that could have severe consequences for the U.S. economy and the world's, too.

Explanation
The Republicans and Democrats each have rival debt-limit emergency fallback plans.

Explanation
John Boener is House Speaker and lead GOP proponent of a plan to raise the nation's borrowing authority and cut spending by a greater amount.

Explanation
Yes, it is possible for America's AAA credit rating to be downgraded. Credit ratings are determined by credit rating agencies based on various factors such as the country's economic performance, debt levels, and political stability. If any of these factors deteriorate significantly, it could lead to a downgrade in the credit rating. Additionally, changes in fiscal policies, government spending, or economic shocks can also impact the credit rating. Therefore, it is possible for America's AAA credit to be downgraded if there are negative changes in these factors.

Explanation
The plan calls for the debt limit to be raised by $900 billion, with accompanying spending cuts of about $917 billion over the next decade.

Explanation
The given statement is true. According to the International Monetary Fund's 2010 figures, the total U.S. debt is 96.3% of GDP. This places the U.S. debt as the 12th highest among other nations.

Explanation
A high debt level can have several negative effects on an economy. Firstly, it can lead to inflation as the government may resort to printing more money to pay off its debts, thereby increasing the money supply and reducing the value of the currency. Secondly, high debt levels can result in higher interest rates as lenders demand higher returns to compensate for the increased risk. This can make borrowing more expensive for individuals and businesses, which can slow down economic growth. Therefore, all of the above factors can be affected by a high debt level.

Explanation
The correct answer is $2.7 trillion. This is the amount of dollars in Senate Majority Leader Harry Reid's debt ceiling proposal.

Explanation
The first dramatic growth spurt of the debt occurred because of the War of 1812. In the first 20 years following the War of 1812, 18 surpluses were experienced and the US paid off 99.97% of its debt.

Explanation
According to the CBO (Congressional Budget Office), the the U.S. last had a surplus during fiscal year (FY) 2001.