Increasing Government Debt Relative to GDP Does Not Cause Which

question 84

Multiple Choice

Increasing government debt relative to GDP does not cause which of the following?

• A)crowding out
• B)an opportunity cost for the funds used to service the debt
• C)the possibility of higher taxes in the future
• D)lower interest repayments relative to the size of GDP

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Definitions:

Implicit Costs

The opportunity costs that are not directly paid for in cash but represent the loss of alternative benefits when resources are used for a particular purpose.

Explicit Costs

Direct, out-of-pocket payments for goods and services that are used in the production of other goods or services.

Accounting Profit

The financial profit of a business calculated by subtracting total expenses from total revenue, as shown in the company's income statement.

Economic Profit

A measure of profitability calculated by subtracting both explicit and implicit costs from total revenues, reflecting the true economic performance of a business.