EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 31, Problem 11DQ
To determine
Cause and effect of financing public debt.
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Students have asked these similar questions
9. True or false? If the statement is false, explain why: LO4
a. An internally held public debt is like a debt of the left hand owed to the right hand.
b. The Federal Reserve and federal government agencies hold more than half the public debt.
c. As a percentage of GDP, the federal debt held by the public was smaller in 2010 than it was in 1990.
d. As a percentage of GDP, the total U.S. public debt is the highest such debt among the world’s advanced industrial nations.
Question 16
The country of Opulencia loves to live large, but has a major debt problem. It has a national debt of
$800 billion, $400 billion in intergovernmental borrowing, $160 billion in bonds held by domestic
citizens, and $240 billion in bonds held by foreign citizens. Opulencia's public debt is equal to:
O $400 billion
O $640 billion
O $960 billion
O $1,200 billion
If the government deficit/GDP ratio remains constant at 6% a year, the real GDP growth rate is 4% a year and the real interest
rate is 1%, the public debt/GDP ratio will converge to the equilibrium level at
O 210%
O 305%
O 208%
O 368%
Chapter 31 Solutions
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