Which of the following statements about the national debt has the most validity?
A. Our large national debt can bankrupt the nation.
B. If only Americans hold the debt, then payments of interest and principal are simply transfers from some Americans to other Americans.
C. Our large national debt can lead to subjection by the people (especially foreigners) who hold the debt.
D. The national debt represents a burden to future generations who will have to make huge payments of interest and principal.
Answer: B
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Government deficit financing is made easier by a p-percentage-point rise in inflation if it raises the nominal interest rate by ________ than p percentage points, and the private sector wishes to hold ________ quantity of real government bonds
A) less, a lower B) less, the same C) more, a lower D) more, the same
The consumption function has a positive slope while the savings function has a negative slope
a. True b. False Indicate whether the statement is true or false
Refer to Figure 5-4. Suppose the point labeled B is the “halfway point” on the demand curve and it corresponds to a price of $5.00. Then, between prices of $4.99 and $5.01, the price elasticity of demand is
a. less than 1 but greater than zero. b. equal to 1. c. greater than 1. d. equal to zero. e. equal to infinity.
A reserve ratio of 0.10 means that a bank can lend an amount equal to:
A. 90 percent of its deposit liabilities. B. 10 percent of its excess reserves. C. 90 percent of its excess reserves. D. 10 percent of its deposit liabilities.