What Is the Main Argument Put Forward by Economists Who

question 13

Multiple Choice

What is the main argument put forward by economists who are in favour of reducing the US budget deficit now and quickly?

• A) The quick action instills credibility and helps to stabilise the interest rate.
• B) The quick action instills credibility and helps to stabilise the bond rate.
• C) The quick action instills credibility and helps to stabilise the level of debt.
• D) The quick action instills credibility and helps to stabilise the current account.
• E) The quick action instills credibility and helps to stabilise the exchange rate.

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Definitions:

U.S. Treasuries

Debt securities issued by the U.S. Department of Treasury used to finance government spending as an alternative to taxation.

Interest Rates

Interest rates are the cost of borrowing money or the return for saving and depositing money, typically expressed as a percentage.

Zero-Coupon Bonds

Bonds that do not pay periodic interest payments but are issued at a substantial discount to their face value, maturing at par.

Coupon Rate

The annual interest rate paid by a bond as a percentage of its face value, typically expressed in annual terms.