Which of the Following Is Not an Important Problem Associated

question 156

Multiple Choice

Which of the following is not an important problem associated with the public debt?

• A) Payments of interest on the debt lead to greater income inequality.
• B) Interest payments on the debt tend to reduce economic incentives to work and invest.
• C) Government borrowing to finance the debt may lead to too much private investment.
• D) Payment of interest on the debt held by foreigners sends real resources abroad.

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Definitions:

Static Budget

A budget based on a set level of activity and does not change in response to changes in business activity levels during the budget period.

Overhead Costs

Indirect costs incurred in the production process or in the provision of services that cannot be directly tied to a specific product or service.

Overhead Allocation

The process of distributing indirect costs to cost objects such as products, services, or business units.

Variable Overhead

Costs that vary indirectly with production volume, such as utilities or indirect materials.