When the Government Borrows Funds in Order to Pay for Its

question 189

Multiple Choice

When the government borrows funds in order to pay for its current expenditures,

• A) the government will have to repay the borrowed funds within five years.
• B) the government can spend without having to increase taxes, either now or in the future.
• C) future taxes will have to be higher in order to pay the interest on the borrowed funds.
• D) the cost imposed on the private sector is virtually eliminated because taxes can remain constant.

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Definitions:

Stress Response

The body's reaction to a perceived threat or challenge, involving physiological and psychological changes.

Sympathetic Nervous System

The nerve fibers of the autonomic nervous system that quicken the heartbeat and produce other changes experienced as arousal and fear. One of the two major routes by which the brain and body produce arousal and fear.

Parasympathetic Nervous System

The nerve fibers of the autonomic nervous system that help return bodily processes to normal.

Cortisol System

The body's stress response system, governed by the adrenal cortex, releasing cortisol, a hormone involved in stress response and metabolism regulation.