If the Federal Government Runs a Budget Deficit,but the Budget

question 7

Multiple Choice

If the federal government runs a budget deficit,but the budget deficit as a percent of GDP is less than the growth rate of real output,the

• A)national debt will decrease as a share of GDP.
• B)national debt will remain a constant share of GDP.
• C)national debt will increase as a share of GDP.
• D)size of the national debt (in dollar value)will decline.

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Definitions:

Efficient Market

A financial market theory suggesting that asset prices fully reflect all available information, making it impossible to consistently achieve higher than average returns.

Insider Trading Laws

Regulations that prohibit the trading of a company's stocks or other securities by individuals with access to non-public, material information about the company.

Market Efficiency

The degree to which stock prices and other securities prices fully reflect all available information and are accurate reflections of the true value of investments.

Capital Markets

Markets that deal in the buying and selling of long-term debt or equity-backed securities to help in capital acquisition.