Chapter 23: Problem 13

When measured as a percentage of GDP, the U.S. national debt reached its highest levels as a result of a. World War II. b. The Vietnam War. c. The Reagan defense buildup and tax cuts. d. The Bush economic recovery program.

Short Answer

Expert verified

The correct answer is option 'a': World War II. It was during this time that the U.S. national debt as a percentage of GDP had the most significant increase due to increased military spending, war bonds, and raised taxes to finance the war effort. Other events, including the Vietnam War, Reagan defense buildup and tax cuts, and the Bush economic recovery program also contributed to the national debt, but not to the extent seen during World War II.

Step by step solution

Option A: World War II

World War II was a major global conflict that lasted from 1939 to 1945, involving many of the world's nations, including the United States. During this time, the US government increased military spending, issued war bonds, and raised taxes to finance the war effort. As a result, the national debt as a percentage of GDP massively increased to levels never seen before.

Option B: The Vietnam War

The Vietnam War was a conflict that took place between 1955 and 1975, involving the US and its allies fighting against North Vietnam and the Viet Cong. This war led to a significant increase in US military spending, and although it did increase the national debt, it was not as substantial as World War II.

Option C: The Reagan defense buildup and tax cuts

During the 1980s, President Ronald Reagan implemented a series of policies that combined increased defense spending with tax cuts. While these policies did lead to a growth in the national debt, it was not as extreme as the debt increase seen during World War II.

Option D: The Bush economic recovery program

The Bush economic recovery program, also known as the Troubled Assets Relief Program (TARP), was a response to the 2008 financial crisis. This program aimed to stabilize the financial system and prevent a collapse of the economy. While it led to a substantial increase in national debt, it still didn't reach the levels seen during World War II.

Conclusion

After analyzing all four options, it is clear that the highest increase in U.S. national debt as a percentage of GDP occurred as a result of World War II. Thus, the correct answer to this question is option 'a'.