S&P Downgrade Quiz

April 2024
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Question 1

Which of the following is NOT true of the downgrade of U.S. debt by Standard and Poor’s?

The downgrade was disputed by the U.S. Treasury Department.
Other major credit ratings firms followed suit in downgrading the U.S. credit rating.
S&P’s financial analysts were responding to what they viewed as a lack of decisive political action to resolve the nation’s debt crisis.
S&P issued its downgrade even though a compromise deal was reached to raise the federal government’s debt ceiling.

Question 2

One possible effect of the downgrade of the U.S. credit rating by Standard and Poor’s is

higher borrowing costs for the federal government.
lower interest rates on consumer loans, credit cards, and mortgages.
an increase in unemployment in the financial sector.
an agreement to lower taxes.

Question 3

The S&P downgrade of the U.S. credit rating

has seriously undermined investors’ confidence in U.S. Treasury bonds.
was a total surprise to investors on Wall Street.
means the United States is likely to default on its debt obligations.
was expected by many investors and financial analysts.

Question 4

What is meant by the comparison of the S&P downgrade of the U.S. credit rating to Sputnik?

The U.S. economy is worse off now than in the 1950s when Sputnik was launched.
American schools need to produce more mathematicians and scientists in order to solve our financial woes.
The people of the United States may respond to the bad news with a strong resolve to fix its debt problems.
The federal budget could be balanceed if NASA spending were cut.

Question 5

What arguments have been made that the United States did not deserve the credit rating downgrade at this time?

The Obama administration and Congress agreed to make more than $2 trillion in budget cuts over the next 10 years and to extend the debt ceiling.
The U.S. economy, still the largest in the world, is large enough to support the level of federal government debt obligations.
The United States has not defaulted and has always paid its debts.
All of the above

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