12th grade Fiscal policy: taxes, spending, deficits and the national debt worksheet

Fiscal policy: taxes, spending, deficits and the national debt

Grade 12 Social Studies Worksheet - Challenge Me

Circle the best answer.

1. Read this first

   Federal debt, interest and GDP, 2019, 2023 and 2024

   Measure (billions of dollars)	2019	2023	2024
   Debt held by the public, September 30	16,809	26,330	28,307
   Total debt, September 30	22,719	33,167	35,465
   Nominal GDP, calendar year	21,540	27,826	29,381
   Net interest outlays, fiscal year	n/a	659	882

   Note: Debt: U.S. Treasury, Debt to the Penny, on September 30 of each year (September 29 in 2023). Net interest outlays: Monthly Treasury Statement, fiscal years ending September 30. GDP: BEA through FRED (series GDPA), calendar years, so fiscal and calendar years do not line up exactly. All retrieved Nov 14, 2026. Card B: The federal deficit for fiscal year 2024 was 1,833 billion dollars (spending above receipts). Debt held by the public is what the Treasury owes outside the government; the rest of the total is owed to government accounts such as trust funds. Card C (in our words): The debt is the sum of past borrowing minus repayment, and a year's deficit adds to it.

2. 1.

   Total debt rose from 33,167 to 35,465 billion in fiscal 2024. Esme compares that with card B's deficit. Which statement is best supported?

   • The extra 465 billion was borrowed for spending outside the budget, which the deficit leaves out
   • Debt rose by 2,298, which is 465 more than the 1,833 deficit; the cards do not say why
   • Debt rose less than the deficit, since part of the borrowing was repaid within the year
   • Debt rose by 1,833, since the deficit and the change in debt are the same thing
3. 2.

   Jun compares percent changes from 2023 to 2024 in debt held by the public, GDP and net interest. Which statement is best supported?

   • Net interest grew fastest, about 34 percent, ahead of public debt (about 7.5) and GDP (about 5.6)
   • Total debt grew the most, since it rose 2,298 billion, the largest dollar change of the four
   • GDP grew faster than debt held by the public, so the debt ratio fell in 2024
   • Net interest rose 223 percent, since 882 is 223 more than 659
4. 3.

   A writer says interest costs rose because Treasury now pays higher interest rates. Kira tests that against the chart. What is the best verdict?

   • Shown: interest grew faster than the debt, so higher interest rates must be the cause of the rise in cost
   • Consistent but not shown: interest rose about 34 percent against 7.5 for the debt, but no rates are given
   • Refuted: the debt grew by about 7.5 percent, so interest cannot have risen faster than that
   • Not shown: interest rose in dollars, 659 to 882, and dollars alone cannot show a change in rates paid
5. 4.

   Luz divides debt held by the public by GDP for 2019 and 2024. Which statement is correct?

   • It rose from about 78 percent of GDP to about 121 percent, as the debt kept growing
   • It fell, since nominal GDP grew by about 36 percent over the five years, a large rise
   • It rose about 18 percent, from 78 to 96, since 96 is 18 more than 78
   • It rose from about 78 percent of GDP to about 96 percent, about 18 percentage points

6. A per-unit tax in a made-up market

   Tax per unit	Price buyers pay	Price sellers keep	Quantity sold
   $0	$5.00	$5.00	100
   $1	$5.60	$4.60	90
   $2	$6.15	$4.15	80

   Note: The markets are made up. Card A: The tax is collected from sellers, who send it to the government for each unit sold; the price buyers pay minus the price sellers keep equals the tax. Card B: Midpoint rule for elasticity: percent change in quantity divided by percent change in price, each measured against the average of the two values, ignoring sign. Card C: Tax revenue is the tax per unit times the quantity sold. Card D (in our words): The part of a tax borne by buyers is the rise in the price they pay; the part borne by sellers is the fall in the price they keep. Card E: In a second made-up market, with the same $1 tax, buyers pay $5.90 and sellers keep $4.90, and quantity sold falls from 100 to 98 (the price before the tax was $5.00).

7. 5.

   The $1 tax is collected from sellers (card A). Pia uses card D and the chart to split who bears it. Which statement is correct?

   • Sellers bear the full $1, since the law collects the tax from sellers
   • Buyers bear 60 cents and sellers 40 cents, though the law collects the tax from sellers
   • Buyers and sellers each bear 50 cents, since a tax is split equally between two sides
   • Sellers bear 60 cents and buyers 40 cents, since the sellers' tax bill is the larger
8. 6.

   Bo applies card B to the move from a $0 tax to the $1 tax. Which statement about demand and supply is best supported?

   • Demand is about 10.5, since 10 fewer units sold is a 10.5 percent fall, so demand is very elastic
   • Demand (about 0.93) is less responsive than supply (about 1.26), so buyers bear more
   • Supply is less responsive than demand, since quantity fell 10.5 percent, so sellers bear the larger share
   • Demand and supply are equally responsive, since quantity fell by the same 10 units, so the tax is split evenly
9. 7.

   The tax doubles to $2. Esme compares revenue (card C) at $1 and $2. Which statement is best supported?

   • Revenue doubles to $180, since a $2 tax is twice a $1 tax and the same units are sold
   • The second dollar of tax adds $70 of revenue, less than the first $90
   • The second dollar raises $80, the same as the first, because $160 over two dollars is $80
   • Revenue falls at $2, since sales fell from 90 to 80 and fewer units mean less revenue
10. 8.

    At the $2 tax, buyers pay $1.15 more and sellers keep $0.85 less. A reporter says the buyers' share rose as the tax rose. Tala tests that.

    • Yes: a higher tax shifts more of the burden onto buyers, since they cannot avoid paying it
    • No: the buyers' share slipped from 60 to 57.5 percent as the tax rose from $1 to $2
    • Yes: buyers' extra payment rose from $0.60 to $1.15, so their share of the tax must have risen as well
    • No: sellers' share stayed at 40 percent, so the buyers' share stayed at 60 percent as the tax rose
11. 9.

    Card E gives a second market with the same $1 tax. Zee compares which side responds less in each market. Which pattern holds in both?

    • Buyers bear the same share in both markets, since the tax is the same $1 per unit sold
    • The side that responds more bears more of the tax in both markets, since it has more to lose
    • The side that responds less bears more: buyers 60 cents in one market, 90 in the other
    • Sellers bear more in card E, because their price fell by 10 cents while quantity fell by 2 units
12. 10.

    A city wants a $1 tax that raises revenue while cutting sales least. Ren compares the main market with card E's market. Which is better for that aim?

    • Neither is better, since both markets face the same $1 tax
    • The main market, because buyers bear less of the tax there, 60 cents against 90
    • Card E's market raises more revenue but loses more sales, so there is a trade-off
    • Card E's market: sales fall by 2 units against 10, and revenue is $98 against $90