As the Size of a Nation's Outstanding Debt Gets Larger

question 98

Multiple Choice

As the size of a nation's outstanding debt gets larger and larger relative to the size of the economy,

• A) eventually it will become difficult for the country to borrow in global credit markets.
• B) the country will have to pay higher real interest rates in order to induce investors to purchase its bonds.
• C) at some point, the country will be more or less forced to bring spending into line with revenues in order to maintain the confidence of investors.
• D) all of the above are correct.

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Definitions:

Public Hysteria

A phenomenon where a large group of people display an exaggerated or uncontrollable emotion due to rumors, fear, or a perceived threat.

Media Inquiries

Requests for information or comments from the media, typically handled by an organization’s public relations department.

Government Relations

The management of interactions and communication between an organization and government officials or agencies.

Elected Officials

Individuals who have been chosen through a democratic voting process to hold public office and represent the interests of their constituents.