If the federal government fails to reduce the nation's debt relative to income,
a. it will become easier to borrow in the global credit markets.
b. the interest expenses on the outstanding debt will increase.
c. the cost of holding outstanding debt will decrease.
d. it will be easier to cover the interest on outstanding debt with tax revenues.
B
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Once monetary policy is dedicated to controlling the level of nominal GDP, then fiscal policy can be used to
A) choose the overall level of interest rates, with a high budget surplus implying a high level of interest rates. B) choose the overall level of interest rates, with a high budget deficit implying a high level of interest rates. C) control the level of inflation, with a high budget surplus implying a faster rate of inflation. D) control the level of inflation, with a high budget deficit implying a faster rate of inflation.
Refer to Figure 7.1. At output level Q3
A) average fixed cost reaches its minimum. B) average total cost reaches its minimum. C) average variable cost reaches its minimum. D) marginal cost reaches its minimum. E) all of the above
When Fed policy is being used to offset a contractionary gap, which of interest rates, investment, net exports and aggregate demand moves in the opposite direction from the others? a. Interest rates
b. Investment. c. Net Exports. d. Aggregate demand..
If the supply of money increases as a result of an open market ______ of securities by the Fed, the interest rate will ______.
a) sale; increase b) sale; decrease c) become flatter d) none of the above