A Public Debt Which Is Owed to Foreigners Can Be

question 49

Multiple Choice

A public debt which is owed to foreigners can be burdensome because:

• A) Foreign interest rates are persistently higher than domestic interest rates
• B) The payment of interest reduces the volume of goods and services available for domestic uses
• C) The payment of interest will conflict with a nation's foreign aid programs
• D) The payment of interest will necessarily have a deflationary effect on prices in the paying nation

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Definitions:

Net Method

An accounting approach that records transactions after deducting any discounts, rather than recording them at their gross amount and including the discounts as a separate item.

Purchase Discounts

Price reductions given by suppliers to buyers as an incentive for early payment of their purchase invoices.

Journalize

The process of recording business transactions in the journal, making note of the debit and credit of each transaction as per double-entry bookkeeping rules.

Inventory Valuation

The process of determining the monetary value of a company's inventory, using methods such as FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and weighted average cost.