As the Size of a Nation's Outstanding Debt Gets Larger

question 98

Multiple Choice

As the size of a nation's outstanding debt gets larger and larger relative to the size of the economy,

• A) eventually it will become difficult for the country to borrow in global credit markets.
• B) the country will have to pay higher real interest rates in order to induce investors to purchase its bonds.
• C) at some point, the country will be more or less forced to bring spending into line with revenues in order to maintain the confidence of investors.
• D) all of the above are correct.

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Definitions:

Suburbanization

The process of population movement from within cities to the outskirts, creating residential and sometimes business developments.

Recessions

Periods where an economy experiences negative growth for two consecutive quarters, marked by decreased spending and increased unemployment.

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Houses that are manufactured off-site in advance, usually in standard sections that can be easily shipped and assembled.

William Levitt

An American real estate developer known for popularizing the modern American suburb through the mass production of affordable housing.