A Serious Burden of a Budget Deficit and an Increase

question 100

Multiple Choice

A serious burden of a budget deficit and an increase in the national debt comes on the supply side because large budget deficits

• A)discourage consumption and therefore lead to production cutbacks.
• B)lead to lower interest rates and therefore to excessive optimism by consumers and businesspeople.
• C)discourage investment and therefore may reduce the growth of the nation's capital stock.
• D)discourage foreign investment and therefore limit employment opportunities.

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Definitions:

P/E Ratio

The price-to-earnings ratio, a valuation metric comparing a company's current stock price to its per-share earnings.

EBIT

Earnings Before Interest and Taxes, a financial metric used to evaluate a company's operating performance.

Free Cash Flow

The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment to boost its long-term revenue.