The Idea That a Large National Debt Is "Mortgaging the Future

question 37

Multiple Choice

The idea that a large national debt is "mortgaging the future of our children and grandchildren" is misleading because:

• A) it is the Federal Reserve that will be responsible for making interest payments on the debt.
• B) future generations will have to bear the opportunity costs of the resources that are used today.
• C) future generations will not be liable for the interest obligations of the national debt.
• D) future generations will inherit the interest income as well as the interest obligations.

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Definitions:

Manufacturing Overhead

The indirect factory-related costs that are incurred when a product is manufactured, including costs such as maintenance, utilities, and equipment depreciation.

Predetermined Overhead Rate

An estimated rate used to assign overhead costs to products or job orders, based on a selected activity base.

Direct Labor-Hours

The total number of labor hours spent on producing a single unit of a product or service.

Fixed Manufacturing Overhead

Costs that do not vary with production volume, such as rent, salaries of permanent staff, and depreciation of factory equipment.