Which of the following is a true statement in reference to the national debt? a. It is almost entirely a result of World War II. b. As a percentage of GDP, it has decreased in recent years. c. It is now large enough for one to question the government's solvency. d. It is now growing at about $10 billion per year. e. As a percentage of GDP, it has steadily grown since World War II.

Which of the following is a true statement in reference to the national debt? a. It is almost entirely a result of World War II. b. As a percentage of GDP, it has decreased in recent years. c. It is now large enough for one to question the government's solvency. d. It is now growing at about $10 billion per year. e. As a percentage of GDP, it has steadily grown since World War II.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter17: Federal Deficits, Surpluses, And The National Debt

Section: Chapter Questions

Problem 7SQP

See similar textbooks

Similar questions

A government starts off with a total debt of $3.5 billion. In year one, the government runs a deficit of 400 million. In year two, the government runs a deficit of 1 billion. In year three, the government runs a surplus of 200 million. What is the total debt of the government at the end of year three?
What is likely to happen to a country's budget deficit if the government increases spending without raising taxes during a period of economic stagnation? A. The budget deficit will decrease because government spending will stimulate economic growth. B. The budget deficit will increase because government spending exceeds tax revenue. C. The budget deficit will remain unchanged because the increase in government spending is offset by increased tax revenue from stimulated economic activity. D. The budget deficit will turn into a budget surplus because increased government spending always leads to higher tax revenues in the long run.
How does an increase in government spending without a change in taxes typically affect the national debt? A. The national debt decreases because government spending stimulates the economy. B. The national debt remains unchanged because the increase in spending is offset by economic growth. C. The national debt increases because government spending exceeds tax revenues. D. The national debt fluctuates unpredictably due to the complex nature of economic variables.
Suppose that in 2018 the federal government spent $3.4 trillion and collected $2.8 trillion in taxes. In 2019, government spending rose to $3.8 trillion and government revenue rose to $3.0 trillion. If the government debt was $20.0 trillion at the beginning of 2018, what will it be at the end of 2019? Select one: a. $21.4 trillion b. $20.8 trillion c. $20.6 trillion d. $19.8 trillion e. $18.6 trillion
Suppose a government has no debt and a balanced budget. Suddenly it decides to spend $5 trillion while raising only $4 trillion worth of taxes. Instructions: Enter your responses rounded to one decimal place. a. What will be the government's deficit? 24 1000 billion b. If the government finances the deficit by issuing bonds, what amount of bonds will it issue? $4 1000 billion C. At a 3 percent rate of interest, how much interest will the government pay each year? $4 30 billion d. Add the interest payment to the government's $5 trillion expenditures for the next year, and assume that tax revenues remain at $4 trillion. In the second year, compute the () Deficit: $ billion (ii) Amount of new debt (bonds) issued to finance the deficit in the second year: $ billion (iii) Total debt at the end of the second year: $ billion (iv) Debt service requirement: $ billion < Prev 5 of 5 Next W tv N FEB 877 9.
Which of the following, regarding debt and growth, is false? a. If there is no (nominal) GDP growth, the debt/GDP ratio can only be reduced through fiscal surplus. b. Furman and Summers argue that the debt/GDP ratio is a misleading measure of a country's debt burden in an era of low interest rates. c. The burden of a dollar borrowed by the government today decreases over time—relative to GDP—if the interest rate on government debt is larger than the nominal economic growth rate. d. Blanchard and Leigh found that, following the Great Recession, countries that enacted fiscal austerity had less economic growth than they expected, and vice- versa
According to the traditional view on government debt, a tax cut without a cut in government spending:a. stimulates consumer spending and reduces national saving in the short run.b. stimulates consumer spending and reduces private saving in the short run.c. raises consumption in both the short run and the long run.d. has no effect on consumer spending but reduces national saving in the short run.e. has no effect on consumer spending but reduces private saving in the short run.
What is the difference between the federal budget deficit and the national debt? a. The budget deficit is the amount by which expenditures exceed revenues in a particular year, while the national debt is the cumulative effect of all past budget deficits and surpluses. b. The budget deficit is the cumulative effect of all prior national debts. c. The national debt includes all outstanding bonds, while the budget deficit excludes bonds held by government agencies. d. This is a trick question because there is no difference between the budget deficit and the national debt.
Complete the following sentence. As it relates to fiscal policy, a budget deficit exists when:Choose one answer.a. the government receipts are greater than its expenditures. b. the government expenditures are greater than its receipts. c. the government expenditures are equal to its receipts. d. the national debt is less than the yearly revenue.
A: What is the difference between a deficit and the national debt. B: What do we mean by The Crowding Out Effect? C: Using graphs for support, explain how increases in the budget deficit result in larger trade deficits. D: In 1988 interest on the national debt was $214 billion and in 2018 it was $532 billion. In 1988 10% of the interest was paid to the foreign sector and in 2018 28% was paid to the foreign sector. In percentage terms, how much did interest paid to the foreign sector increase between 1988 and 2018?
True or false? If false, explain why.a. The total public debt is more relevant to an economy than the public debt as a percentage of GDP.b. An internally held public debt is like a debt of the left hand owed to the right hand.c. The Federal Reserve and Federal government agencies hold more than three-fourths of the public debt.d. The portion of the U.S. debt held by the public (and not by government entities) was larger as a percentage of GDP in 2007 than it was in 1995.e. In recent years, Social Security payments to retirees have exceeded Social Security tax revenues from workers and their employers.
Try the following exercises to better understand how the national debt is related to the government's budget deficit. a.Assume that the gross national debt initially is equal to $3 trillion and the federal government then runs a deficit of $300 billion: i.What is the new level of the gross national debt? ii. If 100 percent of the deficit is financed by the sale of securities to federal agencies, what happens to the amount of debt held by the public? What happens to the level of gross debt? iii. If GPD increased by 5 percent in the same year that the deficit is run, what happens to gross debt as a percentage of GDP? What happens to the level of debt held by the public as a percentage of GDP?