If the Federal Government Fails to Control the Growth of Its

question 76

Multiple Choice

If the federal government fails to control the growth of its debt and the debt grows larger and larger as a share of the economy,which of the following is most likely to happen?

• A)The government will default by refusing to pay the bondholders.
• B)Interest rates will decline and this will make it easier for the government to handle the outstanding debt.
• C)The government will repay bondholders with newly created money and this will lead to inflation.
• D)The government will repay the bondholders with newly created money and the expansionary monetary policy will generate a long-term economic boom.

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Definitions:

Income

The money received, especially on a regular basis, for work or through investments.

Head of Household

A filing status for individual U.S. taxpayers who are unmarried and pay more than half the cost of maintaining a home for themselves and a qualifying person.

Total Income

The sum of all earnings or revenues received by an individual or organization, before any deductions or taxes.

Total Deductions

The sum of all the amounts subtracted from gross income to reduce taxable income, including tax, social security contributions, and other withholdings.