Incurring an Internal Debt to Finance a War Does Not

question 48

Multiple Choice

Incurring an internal debt to finance a war does not pass the cost of the war on to future generations because:

• A)the opportunity cost of wartime expenditures was borne by the generation that lived during the war.
• B)the Federal government can shift expenditures from military goods to the production of other public goods.
• C)the Federal government has the power to levy taxes to pay its debts.
• D)wartime inflation reduces the relative size of the public debt.

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Definitions:

Equity Securities

Equity securities represent an ownership interest held in a company by individuals or firms in the form of stocks.

Classification

The process of organizing data or items into categories based on their similarities, properties, or characteristics.

Accounting Method

An accounting method is a set of rules that determine how and when income and expenses are recorded in the financial statements.

Investments

Assets purchased with the expectation that they will generate income or appreciate in the future.