Credit Rating Downgrade Triggers Warning Signs for U.S. Economy
Ask students: What is Moody's and what action did it take? Why did Moody's downgrade the U.S. government's credit rating?
The growing size of the U.S. debt, and the concerns over how much more it will increase, is very much on the minds of investors, markets and lawmakers. The developments were tied in part to Moody’s announcement that it was downgrading the U.S. credit rating over concerns about large annual deficits, debt and rising interest costs.
Key Terms
- deficit — the amount the federal government spends above what it raises through things like taxes
- debt — the total amount of money that the U.S. government has borrowed to make up annual deficits
- tariff — a tax on imported or exported goods
Discussion Questions
- What is Moody's and what action did it take?
- Who is David Wessel, and what is his background?
- Why did Moody's downgrade the U.S. government's credit rating?
- Where might investors go if the U.S. dollar is no longer a safe investment, according to Wessel?
- How does federal debt and credit rating affect what the everyday economy for people in the U.S.?
Focus Questions
What do you think is the most important action that the U.S. government can take to improve the economy right now?
Media literacy: Are there any economic terms or ideas in this segment that you don't know much about? How could you find out more?
Extension Activity
The segment in this lesson describes the ways government debt can increase borrowing costs, which increases costs for people looking to buy things like houses or cars. But what else is impacting prices? Watch the following story on the state of tariffs and their impact on costs.
After watching this story, return to the focus question of the lesson. What action do you think the federal government could take that would most improve the economy? What action could the government take to make prices lower for most things? Do you think improving the economy and lowering prices are the same thing?
Republished with permission from PBS NewsHour Classroom.
PBS News Hour Classroom helps teachers and students identify the who, what, where and why-it-matters of the major national and international news stories. The site combines the best of News Hour's reliable, trustworthy news program with lesson plans developed specifically for... See More
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