In which of the following cases does the size of the government's debt and the size of the budget deficit indicate potential problems for the economy? a. The government's debt is relatively low, but the government is running a large budget deficit as it builds a highspeed rail system to connect the major cities of the nation. b. The government's debt is relatively high due to a recently ended deficit-financed war, but the government is now running only a small budget deficit. c. The government's debt is relatively low, but the government is running a budget deficit to finance the interest payments on the debt.
Added by -Ngel S.
Step 1
** Show more…
Show all steps
Your feedback will help us improve your experience
Jennifer Stoner and 71 other Macroeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
Multiple Choice Question.... Which statement is a major consequence of high government budget deficits? A) All else held constant, high budget deficits financed by borrowing will lead to lower interest rates. B) If the government finances the deficit by borrowing money, it can crowd out business investment. C) Budget deficits cause unemployment as firms relocate to countries with balanced budgets. D) Printing money to finance the deficit can lead to a significantly deflationary environment.
Andrew D.
Which kind of budget would cause the largest increase in a country national debt? A. One that decrease taxes and increase spending B. One that decrease taxes and decrease spending C. One that increase taxes and increase spending B. One that increase taxes and decrease spending
Haricharan G.
Consider the following data for a closed economy: $Y=\$ 12$ trillion $C=\$ 8$ trillion $G=\$ 2$ trillion $S_{\text { Public }}=\$-0.5$ trillion $T=\$ 2$ trillion Use these data to calculate the following: a. Private saving b. Investment spending c. Transfer payments d. The government budget deficit or budget surplus
Economic Growth, the Financial System, and Business
Saving, Investment, and the Financial System
Recommended Textbooks
Principles of Economics
Macroeconomics
Economics
Transcript
Watch the video solution with this free unlock.
EMAIL
PASSWORD