When Countries Have Severe Debt Problems

question 210

Multiple Choice

When countries have severe debt problems:

• A) fiscal policy is an especially good idea.
• B) expansionary fiscal policy can reduce real growth.
• C) it makes no difference for fiscal policy.
• D) they can continue to borrow forever without any adverse consequences.

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Definitions:

Igneous Rocks

Rocks formed through the cooling and solidification of magma or lava.

Sedimentary Rock

A type of rock that forms from the accumulation and cementation of mineral and organic particles, often in layered deposits.

Magma

Molten rock located beneath the surface of the Earth, which can form intrusive or extrusive igneous rocks upon cooling.

Metamorphic Rock

Rock that has undergone transformation in texture, mineralogy, or chemical composition due to high temperature and pressure.