Increases in the Fraction of National Debt Held by Foreigners

question 111

Multiple Choice

Increases in the fraction of national debt held by foreigners _____ the burden of debt service on future generations _____.

• A)decrease;because it is easier for the borrowing nation to default on the debt
• B)decrease;but may make the country more vulnerable to foreign intervention
• C)decrease;because debt servicing accomplished by increases in the money supply is not as inflationary as it would be if all debt were held domestically
• D)increase;because taxes to repay the debt are collected within the country but more interest payments on the debt are sent outside
• E)increase;because foreign bondholding pushes up interest rates at the date of issue,increasing crowding out

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Definitions:

Caveat Emptor

A Latin phrase meaning "let the buyer beware," indicating that the responsibility for due diligence on a purchase lies with the consumer.

Caveat Emptor

A principle in commerce that places the responsibility on the buyer to perform due diligence before making a purchase.

Principle

A fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.

Ethics of Exchange

Moral principles that govern the conduct of transactions between buyers and sellers, ensuring fairness and honesty in the marketplace.