Econ ch 13 quiz

If the national debt rises to the debt ceiling and there is currently a budget , the 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.

b. deficit, raise

The federal government finances a budget deficit by a. taxing businesses and households.

b. selling Treasury securities.

The portion of the U.S. national debt held by foreigners

represents a burden because it transfers purchasing power from U.S. taxpayers to other countries.

Which of the following own a portion of the national debt?

e. All of the answers above are correct.

When measured as a percentage of GDP, the U.S. national debt reached its highest levels as a result of

a. World War II.

The national debt is unlikely to cause national bankruptcy because the

a. national debt can be refinanced by issuing new bonds.

"Crowding in" refers to federal government deficits

a. used for public infrastructure, which will offset any decline in business investment.

During 1998-2001, federal government budget deficits

a. were completely removed.

Which of the following statements about crowding out is true?

b. It is caused by a budget deficit.

Currently, the national debt is approximately

c. $20 trillion.

Currently, approximately what percentage of the U.S. national debt is owed to foreigners?

c. About 30 percent.

Which of the following countries has the smallest national debt as a percentage of GDP?

c. Australia.

Ch.13. Which of the following correctly describes the national debt?

c. The total amount of money owed by the federal government.

If the federal government runs a budget ______ , then the national debt beceome __________

c. surplus, smaller

As the national debt grows as a percentage of the U.S. economy, which of the following is (are) true?

d. All of the answers above are correct.

As the size of a nation's outstanding debt gets larger and larger relative to the size of the economy

d. All of the answers above are correct.

Which of the following is false?

d. All of the answers above are false.

Which of the following statements about crowding out is true?

d. It affects interest rates and, in turn, consumption and investment spending.

Currently, the national debt as a percentage of GDP is

d. approximately the same size in 1950.

Supply-side economists argue that less government spending

e. would make more investment capital available at lower rates of interest to the private sector.