If the Government Ran a Major Deficit, and There Was

question 8

Multiple Choice

If the government ran a major deficit, and there was no noticeable effect on the level of GDP, this could be taken as evidence of

• A)crowding-in.
• B)structural deficit.
• C)crowding-out.
• D)monetary policy ineffectiveness.

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Definitions:

Covenant Waivers

Agreements that allow a borrower to avoid being in default on their loan covenants, often granted by a lender under certain conditions.

Indenture Evaluation

The process of assessing the terms and conditions of a bond agreement, known as an indenture.

Free Cash Flows

The amount of cash a company generates after accounting for capital expenditures needed to maintain or expand its asset base.

Cash Flow Approach

A financial analysis method that focuses on the company's cash inflows and outflows, rather than its net income.