A Debt That Rises Faster Than Nominal GDP Will Impose

question 82

Multiple Choice

A debt that rises faster than nominal GDP will impose the following opportunity costs in the future:

• A) A permanently higher tax burden.
• B) A period of inflation.
• C) Reduced government outlays relative to GDP
• D) Higher taxes relative to GDP.
• E) All of the above.

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Definitions:

Marginal Cost

The additional cost incurred by producing one more unit of a good or service, critical in decision-making processes regarding output levels.

Excess Profits

Profits that exceed the normal expected return on investment, often resulting from monopoly power or a unique competitive advantage.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.

Marginal Costs

The price increase resulting from the creation of an additional unit of a product or service.