Explain what can occur to cause an increase in the debt ratio
What will be an ideal response?
The debt ratio is simply the ratio of the stock of debt to GDP. So, the debt ratio will rise whenever the increase in debt is greater than the increase in GDP. Even if the primary deficit is zero, the debt ratio will increase if the interest payments on the existing debt are such that they more than offset the fact that the economy is growing. So, a comparison of the real interest rate and growth rate of GDP will be important. Also, the debt ratio will rise if the primary deficit exists (or increases).
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Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table above gives their production possibilities
A) Blue Violet has a comparative advantage in teapots. B) Sweet Pansy has a comparative advantage in teapots. C) Both have a comparative advantage in teapots. D) Sweet Pansy has an absolute advantage in teapots.
Which of the following is the equation for determining an expected value?
A. (1 - Risk factor) × PDV. B. (1 - Risk factor) ÷ PDV. C. (Risk factor - 1) × PDV. D. (Risk factor - 1) ÷ PDV.
A person who starts practicing poisonous snake charming after signing a contract with a health insurance company is an example of
A) moral hazard. B) adverse selection. C) signaling. D) screening.
Behavioral economics is the study of situations in which people make rational choices
Indicate whether the statement is true or false