The Federal Government Has a Large Public Debt That It

question 80

Multiple Choice

The federal government has a large public debt that it finances through borrowing.As a result, real interest rates are higher than otherwise and the volume of private investment spending is lower.This illustrates the

• A)equation-of-exchange effect.
• B)paradox of thrift.
• C)crowding-out effect.
• D)net export effect.

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Definitions:

Standard Cost

A predetermined cost of manufacturing, which is often used for budgeting and measuring performance.

Purchase Price Variances

The difference between the actual cost of purchased inventory and its standard or expected cost.

Currently Attainable Standard

This refers to a standard or benchmark that can be achieved under current operating conditions with reasonable efficiency.

Unfavorable Cost Variance

A variance that occurs when the actual cost exceeds the standard cost.