Refer to the Following Figure When Answering the Following Questions

question 74

Multiple Choice

Refer to the following figure when answering the following questions.
Figure 18.2: Government Outlays and Receipts as a Percentage
of GDP, 1947-2012
-Consider Figure 18.2. What was the cause of the huge budget deficit beginning in 2007?

• A) the oil crisis
• B) the Great Recession
• C) President Reagan's defense expenditures
• D) the second Gulf War
• E) the Volcker recession

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Definitions:

Gilts

British and Irish government securities, including issues of local British authorities and some overseas public-sector offerings.

Government Securities

Financial instruments issued by the government to raise funds from the public, including bonds, notes, and bills, generally considered low-risk investments.

Forward Rate

An interest rate agreed upon today for a loan that will start at a future date, reflecting expectations of future interest rates.

Future Rate

The future rate is a predicted interest or exchange rate based on current and expected future economic conditions, affecting loans, investments, and financial planning.