Macro CH 23

Crowding out effect

The ________________________ is a theory that government borrowing to finance its deficit causes the interest rate to rise. As the interest rate rises, consumption and business investment fall.

National debt

The _________________________ is the dollar amount that the federal government owes holders of government securities. It is the cumulative sum of past deficits.

Crowding in effect

The __________________________ is a theory that Treasury securities resulting from federal deficits increases wealth and consumer spending.

Debt ceiling

The ___________________________ is the legislated legal limit on the national debt.

International national debt

The percentage of the national debt a nation owes to its own citizens is called.

External national debt

______________________________ 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.