12. As the outstanding debt of a nation becomes very large relative to the size of the economy, Group of answer choices -the borrowing cost of the government will decline. -lenders will have no choice but to hold the outstanding bonds and to buy the new ones as they are offered. -a country like the United States will have no choice but to default on the payments to bond holders. -if the country has a central bank, it will almost certainly resort to money creation to service the debt rather than directly default. Which is correct?
12. As the outstanding debt of a nation becomes very large relative to the size of the economy, Group of answer choices -the borrowing cost of the government will decline. -lenders will have no choice but to hold the outstanding bonds and to buy the new ones as they are offered. -a country like the United States will have no choice but to default on the payments to bond holders. -if the country has a central bank, it will almost certainly resort to money creation to service the debt rather than directly default. Which is correct?
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter8: Savings,investment And The Financial System
Section: Chapter Questions
Problem 8PA
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12.
As the outstanding debt of a nation becomes very large relative to the size of the economy,
Group of answer choices
-the borrowing cost of the government will decline.
-lenders will have no choice but to hold the outstanding bonds and to buy the new ones as they are offered.
-a country like the United States will have no choice but to default on the payments to bond holders.
-if the country has a central bank, it will almost certainly resort to money creation to service the debt rather than directly default.
Which is correct?
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