Which of the Following Statements Is TRUE About the Public

question 130

Multiple Choice

Which of the following statements is TRUE about the public debt and future generations?

• A) Future generations will always be worse off because they will have to pay off the public debt.
• B) Increased consumption today will lead to increases in the capital stock in the future.
• C) Future generations may be better off if the rate of return on the borrowed funds is higher than the interest rate paid to foreign residents.
• D) The public debt cannot be held by foreign residents therefore we really owe the debt to ourselves.

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Definitions:

Financial Statements

Comprehensive reports created from accounting records that convey a business's financial performance, position, and cash flows over a specific period.

Profit and Loss

A financial statement that summarizes the revenues, costs, and expenses incurred during a specified period.

Statement of Cash Flows

A financial report that shows how changes in balance sheet accounts and income affect cash and cash equivalents.

Trial Balance

A financial report that lists all the balances in each ledger account at a point in time, used to ensure debits equal credits.