When Deficits Are Run Continuously with a Constant Nominal Interest

question 133

True/False

When deficits are run continuously with a constant nominal interest rate,nominal interest payments on the total nominal debt will become smaller relative to future deficits,ceteris paribus.

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Definitions:

Consolidated Retained Earnings

The accumulated net income of a corporation and its subsidiaries after dividends have been paid out to shareholders, presented in the consolidated financial statements.

Acquisition

The act of obtaining control of another company by purchasing its shares or assets.

Common Stock

Shares of ownership in a corporation that entitle the shareholder to vote on corporate matters and receive dividends.

Net Assets

The total assets of a company minus its total liabilities, indicating the company's underlying value.