According to the Washington Post, small businesses are beginning to brace for a worst-case scenario of delayed payments, stalled projects and layoffs if the nation defaults on its debt.

Questions:

1. Briefly explain the ripple effect in the economy described in the article if default happens.
2. What would be the estimated lost jobs?
3. What would be the loss in household wealth?
4. Even if a deal is reached, what instabilities in the economy are already evident?

Source:

Bhattarai, A. (2023). Small businesses are beginning to panic about a government default. The Washington Post, May 21 (Retrievable online at https://www.washingtonpost.com/business/2023/05/20/debt-ceiling-small-business/)