Consider the Government's Debt-To-GDP Ratio

question 73

Multiple Choice

Consider the government's debt-to-GDP ratio.A significant reason for a government to maintain a low debt-to-GDP ratio is so that

• A)the real interest rate remains high,which leads to increased investment.
• B)the Canadian dollar will appreciate and net exports will increase.
• C)the government has the flexibility to use expansionary fiscal policy if the economy enters a recession.
• D)the Bank of Canada has the flexibility to use contractionary policy.
• E)there is no "crowding in" of investment or net exports.

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Definitions:

Break-even Sales

Break-even sales is the amount of revenue required to cover both fixed and variable costs, resulting in no profit or loss.

Variable Costs

Costs that fluctuate in direct relation to production levels or sales figures.

Fixed Costs

Costs that do not vary with the level of production or sales, remaining constant regardless of business activity.

Sales Revenue

The total amount earned from the sale of goods or services before any costs or expenses are deducted.