Which of the Following Statements About Government Borrowing Is Not

question 28

Multiple Choice

Which of the following statements about government borrowing is not true?

• A) It provides the government the ability to maintain spending levels during economic downturns.
• B) "Crowding out" of private investments is a major opportunity cost of government borrowing.
• C) Its opportunity cost is likely to be quite high during an economic downturn.
• D) A bigger budget deficit will result in a bigger amount of government borrowing.

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Definitions:

Retirement Income

The funds an individual receives after retiring, which can come from various sources including pensions, savings, and social security.

Actuarial Calculations

The mathematical analysis performed by actuaries to calculate risks, premiums, life expectancies, and pension contributions, based on statistical data.

Assumed Investment Rate

The hypothesized annual rate of return expected from an investment used in financial planning and projections.

Annuity Cost

The initial sum paid or the series of periodic payments required to obtain an annuity.