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.

---

Definitions:

Greater Power

Refers to the superior ability or authority of an individual or group to influence or control outcomes in their favor.

Controlled Processing System

A cognitive system involving conscious, deliberate thought and attention for complex tasks or decisions.

Rigid

Describes something or someone that is inflexible, strict, or unable to change.

Objective Power

The ability to influence others or affect outcomes based on one's position or resources, independently of personal characteristics.