Interest Payments on the National Debt

question 127

Multiple Choice

Interest payments on the national debt

• A) account for over 50 percent of government expenditures.
• B) have been falling since the 1970s.
• C) have been rising since the 1950s.
• D) have been reduced to zero by the Gramm-Rudman-Hollings Act.
• E) are twice the size of the federal budget deficit.

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Definitions:

Put Option

An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Interest Rate

The percentage of a sum of money charged for its use, often expressed on an annual basis.

Financial Risk Management

The practice of protecting economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk.