Accumulating Debt Poses a Problem for the U

question 4

Multiple Choice

Accumulating debt poses a problem for the U.S.federal government because

• A)it is currently in danger of defaulting on the debt.
• B)a large debt-to-GDP ratio causes crowding out.
• C)building roads and bridges do not yield enough benefits to justify their cost.
• D)the debt has to ultimately be paid off.

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Definitions:

Cash Flows

The cumulative sum of funds moving in and out of a company, particularly impacting its ability to cover short-term obligations.

Indirect Method

A method of reporting cash flows from operating activities in the cash flow statement by starting with net income and adjusting for non-cash transactions.

Indirect Method

A technique used in cash flow analysis to adjust net income by changes in non-cash accounts to arrive at cash provided by operating activities.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was acquired, used to reduce the asset's book value over time.