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:

Finance Committee

A subgroup within an organization, typically composed of members of its governing body, responsible for overseeing financial policies, strategies, and health.

Financial Expert

A professional with extensive knowledge and skills in financial markets, investment strategies, and financial planning.

Organization's Investments

Relates to the allocation of resources by an organization into projects, assets, or initiatives with the expectation of achieving future benefits or returns.

Board Responsibility

The obligation of a board of directors to oversee the strategic direction and governance of an organization, ensuring it fulfills its mission while being accountable to its stakeholders.