A Ponzi Spending Unit Is a Spending Unit

question 62

Multiple Choice

A Ponzi spending unit is a spending unit

• A)where the anticipated revenues significantly exceed the anticipated payment obligations.
• B)is one in which the funds coming in may potentially fall short of the payment outflows if there is an increase in interest rates.
• C)must continuously increase its outstanding debt to meet its current obligations or payments.
• D)None of the above is correct.

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Definitions:

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, that sells goods or services for profit.

Factor Market

The marketplace where services of the factors of production (notably land, labor, capital) are bought and sold.

Resources Exchanged

The process through which different types of resources, including goods, services, information, and money, are traded or swapped among individuals, businesses, or countries.

Input Markets

Markets where firms buy resources, goods, and services that they need in order to produce outputs that will be sold in output markets.