The Government Can Continuously Issue New Bonds to Pay the Interest

question 3

Multiple Choice

The government can continuously issue new bonds to pay the interest on its outstanding bonds so long as

• A)the real GDP growth rate exceeds the real interest rate.
• B)the real interest rate exceeds the real GDP growth rate.
• C)the real interest rate exceeds the nominal interest rate.
• D)the nominal interest rate exceeds the cost of borrowing.

---

Definitions:

Scientific Knowledge

Information and understanding acquired through the scientific method, including observation, experimentation, and analysis, contributing to the body of facts and principles.

Negligent Behavior

Actions or omissions by an individual which fall below the legally established standard of care expected to be observed and which cause harm or damage.

Theory Of Recovery

Legal principles that provide the basis on which a plaintiff can sue and obtain damages or other remedies in court.

Establishing Duty

The process of determining whether an individual or entity has a legal obligation or responsibility in a particular situation.