Question

16. (04.05 MC) Which of the following statements best accounts for the data shown in the graph above? (4 points)

Answer 1

The correct answer, according to the graphic is Spending relative to tax revenue drastically increased in 2009.

Indeed, tax revenue is the main source of income for a state. The fact the on the graphic both the Budget Deficit and the National Debt increased exponentially with regards to the previous year, clearly indicates that all the income collected through taxation was insufficient to cover all the expenses and operating costs of the federal government. This is a clear indicator of the serious economic crisis caused by the Great Recession as unemployment was skyrocketing (which means unemployed citizens were not making any money) and spending was at its lowest (since with no money they were unable to buy goods or services which did not yield any tax revenue).