The Possibility of Capital Flight Is Likely to Be Greater

question 60

Multiple Choice

The possibility of capital flight is likely to be greater at higher levels of government debt because there is a greater:

• A) temptation to default on the debt.
• B) likelihood that the government will begin issuing indexed bonds.
• C) probability that a balanced budget will be adopted by the government.
• D) potential for tax smoothing policies to be eliminated.

---

Definitions:

Normative Statements

Statements that express opinions, desires, or judgments about what should be, and do not make factual or objective claims.

Positive Statements

Objective statements that can be tested, amended, or rejected by referring to the available evidence.

Normative Statement

A value judgment about what ought to be, expressing opinions or assertions that cannot be tested or verified.

Positive Statement

An objective statement based on factual evidence that can be tested and validated, often describing what is, rather than what ought to be.