There Is a Long- Term Burden of Government Debt in a Closed

question 98

Multiple Choice

There is a long- term burden of government debt in a closed economy when

• A)foreign owners of Canadian debt demand repayment.
• B)the stock of physical productive capital is reduced because of crowding out.
• C)it is no longer possible to find individuals in the private sector willing to finance the debt.
• D)the burden of the debt is being borne by the current generation rather than future generations.
• E)present consumption and government expenditure are not reduced because of future crowding- out.

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Definitions:

Debt Default

The failure to meet the legal obligations of a loan, such as not making scheduled payments on time.

U.S. Federal Budget

The government's estimate of revenue and spending for a fiscal year that is proposed by the President and approved by Congress.

Federal Deficits

The shortfall where the government's expenditures exceed its revenues within a specific fiscal year.

Interest Payments

The regular payments made to lenders as compensation for the money borrowed, typically expressed as a percentage of the principal sum.