If Government Debt Reduction by a Small Open Economy Has

question 44

Multiple Choice

If government debt reduction by a small open economy has no effect on its interest rate I: the benefits of debt reduction follow from the fact that future generations have smaller debt service payments to foreigners.II: the benefits of debt reduction will be charged by all workers since each worker has more capital to work with.

• A) I is true; II is not.
• B) II is true; I is not.
• C) Both I and II are true.
• D) Neither I nor II is true.

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Definitions:

Marginal Land

Land that yields minimal agricultural output due to poor soil quality, steep slopes, or other environmental factors.

Location

Refers to the geographical situation of a place based on physical and human factors, influencing its connectivity and economic activities.

Marginal Land

Land that has limited agricultural productivity or is challenging to cultivate due to its poor soil, rough terrain, or other adverse conditions.

Rent

Rent is the payment made by a tenant to a landlord for the use of a property, typically on a monthly basis, for residential or commercial purposes.