The Public Debt of a Country Is Not Necessarily a Burden

question 6

Multiple Choice

The public debt of a country is not necessarily a burden on the economy to the extent that:

• A)it grows less rapidly than GDP.
• B)people receive good public services.
• C)people are happy to hold government bonds.
• D)it can be financed without adding to inflation.

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Definitions:

Fixed Costs

Costs that do not vary with the quantity of output produced

Monopolistically Competitive

A market structure characterized by many firms offering products that are similar but not perfect substitutes, leading to competitive yet differentiated markets.

Barriers to Entry

Economic, procedural, or regulatory obstacles that prevent new competitors from easily entering an industry or area of business.

Monopolistically Competitive

In a monopolistically competitive market, many firms sell products that are similar but not identical, allowing for some degree of market power and price setting.