Question 1

Which of the following owns the largest proportion of the national debt?

Accepted Answer

The answer of Which of the following owns the largest...

Question 2

The idea that a large national debt is "mortgaging the future of our children and grandchildren" is misleading because:

Accepted Answer

Future generations inherit both the assets and liabilities created by the national debt, meaning they receive the benefits (interest income from bonds, for example) as well as the obligations (the need to pay interest). This makes the statement that national debt mortgages the future misleading, as it does not account for the assets passed along with the debt.

Question 3

Since 1990,the net interest payment as a percentage of GDP has:

Accepted Answer

The data shows that the net interest payment as a percentage of GDP has declined since 1990.

Question 4

Which of the following portions of the national debt impose a net interest burden on the federal government?

Accepted Answer

The answer of Which of the following portions of the...

Question 5

"Crowding in" refers to federal government deficits:

Accepted Answer

"Crowding in" refers to the potential positive effect of government deficits on private investment. When the government spends money on public infrastructure, it can create new opportunities for businesses to invest in and expand, leading to increased economic growth. This offsets any potential decline in private business investment and consumption spending caused by the deficit. Option A correctly explains the concept of "crowding in". Options B and C describe the opposite effect, known as "crowding out", which is not the same as "crowding in".

Question 6

Supply-side economists argue that less government spending:

Accepted Answer

According to supply-side economists, reducing government spending would lead to a decrease in interest rates, making more investment capital available to the private sector at lower rates. This, in turn, would stimulate economic growth and increase employment opportunities.

Question 7

"Crowding out" is the theory that an increase in our federal government's budget deficit will likely:

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The answer of "Crowding out" is the theory that an...

Question 8

Supply-siders argue that:

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The answer of Supply-siders argue that:
...

Question 9

Which of the following is a valid concern about federal budget deficits?

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The answer of Which of the following is a valid...

Question 10

According to the crowding-out view,budget deficits will:

Accepted Answer

The crowding-out view suggests that budget deficits increase interest rates as the government borrows more money, which reduces the amount of funds available for private investment. This can lead to a decrease in private investment, which can ultimately slow economic growth. Therefore, the best choice is B- increase interest rates and retard private investment.

Question 11

Currently,how much of the U.S.national debt was owed to foreigners?

Accepted Answer

The answer of Currently,how much of the U.S.national debt was...

Question 12

Most of the U.S.national debt is owed to ____.Thus a rising national debt implies that there will be a future redistribution of income and wealth in favor of ____.

Accepted Answer

Most of the U.S. national debt is owed to other U.S. citizens in the form of bonds. A rising national debt implies that there will be a future redistribution of income and wealth in favor of bondholders who will receive interest payments on those bonds, rather than those needing government services or foreigners.

Question 13

Which of the following U.S.Treasury securities represents ownership of the national debt?

Accepted Answer

All of the listed bonds represent ownership of the national debt, as the U.S. Treasury issues bonds to finance government spending, and these bonds are purchased by banks, insurance companies, the Social Security Administration, private individuals, and foreigners.

Question 14

One concern over external national debt is that interest and principal payments transfer wealth overseas.The percentage of the national debt held in recent years by foreigners is approximately:

Accepted Answer

The answer of One concern over external national debt is...

Question 15

External debt is that portion of the national debt:

Accepted Answer

External debt refers to the portion of a country's national debt that is owed to foreign creditors. Therefore, the best choice is D, which states that external debt is held by foreigners.

Question 16

The crowding-out effect refers to:

Accepted Answer

The crowding-out effect occurs when the government borrows funds to finance its budget deficits, leading to an increase in demand for credit and driving up interest rates. This makes it more expensive for individuals and businesses to borrow, reducing their private spending and investment. This ultimately results in a reduction in economic growth.

Question 17

If the crowding-out effect is strong,how will the potency of discretionary fiscal policy be affected?

Accepted Answer

The crowding-out effect occurs when increased government spending leads to an increase in interest rates, which reduces private investment and offsets the stimulative effects of fiscal policy. If the crowding-out effect is strong, then fiscal policy will be less potent because the offsetting effect of higher interest rates will be larger.

Question 18

Which of the following is true if all the national debt were owned internally?

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The answer of Which of the following is true if...

Question 19

In recent years,net interest on the national debt paid by the federal government as a percentage of GDP is equal to approximately:

Accepted Answer

The answer of In recent years,net interest on the national...

Question 20

Supply-siders feel that high levels of government spending:

Accepted Answer

Supply-siders believe that high levels of government spending can crowd out private investment by competing for limited loanable funds in financial markets, leading to higher interest rates and reduced incentives for private firms to invest.

Quiz 17: Federal Deficits,Surpluses,and the National Debt