Suppose That the Budget Deficit of a Country Remains Level

question 142

Multiple Choice

Suppose that the budget deficit of a country remains level for five years. The federal debt will:

• A)remain constant.
• B)fall.
• C)rise.
• D)either remain constant or fall.

---

Definitions:

Effective Interest Rate

The actual interest rate on a loan or financial product, reflecting the compounding periods per year.

Financial Statement

Reports that provide information about a company's financial performance and position, including balance sheets, income statements, and cash flow statements.

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance, based on the account type.

Temporary/Permanent

Categories used to distinguish between accounts that are closed at the end of an accounting period (temporary) and those that carry forward their balance into future periods (permanent).