External financing allows the economy to consume beyond its production possibilities temporarily.
Answer the following statement true (T) or false (F)
True
The debt held by foreign households and institutions is known as the external debt. At the time the debt is sold externally, there are no opportunity costs. Instead of having to move along the production possibilities curve, external borrowing allows us to move from a point on the production possibilities curve to beyond it.
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The long-run social benefits of infant industry protection are more likely to be realized if
(a) investors believe that tariff barriers are permanent. (b) investors believe that tariff barriers are transitory. (c) tariff barriers increase over time. (d) tariff barriers are replaced with quotas over time.
Which of the following categories will be included under state and local government spending in the U.S.?
a. Science and technology b. Health care c. Police and fire protection d. International affairs
The theory of relative backwardness
a. formulated by Rostow b. called for substitutions for missing preconditions c. explained the industrial revolution d. was an idea of Gerschenkron e. both b and d are correct
Sharon buys some common stock in 1990 for $10,000 and sells it in 2000 for $15,000. During the same period, prices have risen by 75 percent. The net result of Sharon’s stock purchases is that she will
A. pay no taxes because she earned negative real capital gains. B. lose purchasing power and have to pay taxes anyway. C. earn a real capital gain of $5,000 plus 75 percent. D. earn a real capital gain of $15,000 minus 75 percent.