The Real Burden of an Increase in the Public Debt

question 68

Multiple Choice

The real burden of an increase in the public debt:

• A)may be very small or conceivably zero when the economy is in the midst of a severe depression.
• B)will be smaller when full employment exists than it will when the economy has large quantities of idle resources.
• C)can be shifted to future generations if the debt is internally financed.
• D)can best be measured by the dollar increase in the size of the debt.

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Definitions:

Break-Even Point

The level of sales at which profit is zero.

Contribution Margin Ratio

A financial metric that measures the proportion of sales revenue that exceeds variable costs and contributes to covering fixed expenses and generating profit.

Net Loss

The result when a company's total expenses exceed its total revenues during a specific period, indicating a negative profit.

Break-Even Point

The point at which total costs and total revenues are exactly equal, resulting in no net profit or loss for a business.