M5 L70 assessment

Which of the following could cause an increase in the national debt?

The federal government borrowing a lot of money

Which of the following could cause an increase in the national debt?

The federal government ran a budget surplus, which means it collected more money than it spent. This reduced the government's need to borrow additional money.

Which of the following explains the correlation between the national debt and a budget deficit?

The national debt is the sum of all annual budget deficits and surpluses plus the interest on money borrowed by the government.

Suppose the federal government sells a security in 2000 for $1,000. In 2010 it owes the security holder $1,500 plus the original $1,000. The $1,500 is an example of

interest

Compound interest on the national debt refers to

interest paid on interest

If the federal government's expenditures are greater than its revenues, then

it has a budget deficit AND it may sell securities or borrow money from foreign governments both of which add to the national debt

Suppose the federal government ran a budget deficit of $47 billion last year and is running a budget surplus of $16 billion this year. Excluding interest, how has the national debt changed over the last two years?

it has increased by $31 billion

Suppose the national debt is $6,356 billion. If the federal government collects $450 billion in revenues while spending $510 billion, what will be the new national debt?

$6,416 billion

Which of the following could cause a decrease in the national debt?

A period of economic expansion

Between 1941 and 1945, the national debt increased. Which of the following was the most likely the cause?

World War II expenses