Chapter 13: Federal deficits, surpluses and national debt
Currently, the net interest payment as a percentage of GDP is about:
1 percent
Which of the following U.S. Treasury securities represents internal ownership of the national debt?
1. Bonds owned by private individuals. 2. Bonds owned by the Social Security Administration. 3.Bonds owned by the banks and insurance companies.
Which of the following statements about crowding out is true?
1. It can completely offset the multiplier. 2. It is caused by a budget deficit. 3. It is not caused by a budget surplus.
Which of the following is false?
1.The national debt's size decreased steadily after World War II until 1980 and then increased sharply each year. 2.The national debt increases whenever the federal government has a surplus budget. 3.The size of the national debt currently is about the same size as it was during World War II. all of them are false
__________ is a burden because it is the portion of the national debt a nation owes to foreigners. When interest is paid on this type of debt, this income transfers purchasing power to other nations.
External national debt
External debt refers to the portion of the national debt owned by private individuals and internal debt refers to that part owned by the public sector.
False
Increased government borrowing stimulates private borrowing because of its effect on interest rates.
False
Internal ownership of the debt refers to the portion of the national debt owned by government agencies
False
Less of the federal debt is owned by federal, state, and local governments than is owned by foreigners.
False
The U.S. Treasury financed federal budget deficits by selling:
Treasury bonds, treasury notes, treasury bills
An increase in a budget deficit financed by borrowing can increase interest rates and reduce investment spending thereby creating lower rates of economic growth.
True
Bonds owned by financial institutions represent ownership of the national debt by the private sector.
True
Which of the following statements is true?
U. S. national debt has more than tripled since 1980
Between 1945 and 1980, the national debt as a percent of GDP:
decreased substantially
In recent years, net interest payments as a percentage of GDP has been:
decreasing
If the national debt rises to the debt ceiling and there is currently a budget ______________, then Congress and the President must agree to ______________ the debt ceiling or else the federal government will have insufficient funds to pay its bills and will be forced to shut down.
deficit, raise
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____________.
other U.S. citizens, bondholders
If all the national debt were owned internally, the federal government would not need to:
----
The _______ is a theory that Treasury securities resulting from federal deficits increases wealth and consumer spending.
Crowding-in effect
The _____ is a theory the government borrowing to finance its deficit causes the interest rate to rise. As the interest rate rises, consumption and business investment fall.
Crowding-out effect
The_________ is the legislated legal limit on the national debt/.
Debt ceiling
The entire national debt is owed to U.S. citizens.
False
With regard to the national debt, to whom does the federal government owe money?
Investors who buy U.S. Treasury bills, bonds, and notes
The _____ is the dollar amount of the federal government owes holders of government securities. It is the cumulative sum of past deficits.
National debt
The way to prevent the national debt from growing is for the budget not to be in deficit.
True
When we speak of the national debt, we refer to the federal government debt only.
True
Crowding out occurs when the federal government:
borrows by selling bonds to finance a deficit.
If Congress fails to pass a budget before the fiscal year starts, then federal agencies may continue to operate only if Congress has passed a:
continuing resolution.
The percentage of the national debt a nation owes to its own citizens is called ________
internal national debt
The sum of past federal budget deficits is the:
national debt
The national debt is unlikely to cause national bankruptcy because the:
national debt can be refinanced by issuing new bonds.
The federal budget process begins when federal agencies submit their budget requests to the:
none of the answers are correct
Compared to Japan, the national debt as a percentage of GDP in the United States is:
substantially smaller
The national debt is best described as the:
sum of all federal budget deficits, past and present.
The crowding-out effect can be:
zero,partial and complete