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 9DQ
Subpart (a):
To determine
Identifying statement on public debt as true or false.
Subpart (b):
To determine
Identifying statement on public debt as true or false.
Subpart (c):
To determine
Identifying statement on public debt as true or false.
Subpart (d):
To determine
Identifying statements on public debt as true or false.
Subpart (e):
To determine
Identifying statement on public debt as true or false.
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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
Suppose that a family's income is exactly the same as the poverty threshold.
This family's income deficit would be
and their ratio of income to poverty would be
O 0; 1
0 ; 0
1;0
O 1;1
Consider a family of four in 2008, whose poverty threshold is $22,024. If this family's total income was $12394, what
would their income deficit be?
income deficit: $
Suppose that the federal government
had a budget deficit of $60 billion in
year 1 and $70 billion in year 2, but
that it experiences budget surpluses of
$50 billion in year 3 and $10 billion in
year 4. Also assume that the
government uses any budget
surpluses to pay down the public debt.
At the end of these four years, the
Federal government's public debt
would have
decreased by $60 billion.
decreased by $57.5 billion.
increased by $60 billion.
increased by $190 billion.
Chapter 31 Solutions
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Similar questions
- Thank you so much for your time!! Public debt is the sum of deficits and surpluses (negative deficits) over time. Suppose that a country has no public debt in year 1 but experiences a budget deficit of $40 billion in year 1, a budget deficit of $20 billion in year 2, a budget surplus of $10 billion in year 3, and a budget deficit of $2 billion in year 4. Part 1: What is the absolute size of its public debt in year 4? Part 2: If the real GDP in year 4 is $104 billion, what is this country’s public debt as a percentage of real GDP in year 4?arrow_forwardIf the real interest rate on government bonds is three percent, real GDP grows at one percent, the current debt-to-GDP ratio is forty percent and the primary budget deficit as a percentage of GDP is two percent, then the debt-to-GDP ratio will rise in a year by. percentage points. O a. 0.28 O b. 0.82 O c. 2.8 O d. 8.2 O e. 82arrow_forwardIf 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%arrow_forward
- Now suppose that the gross national debt initially is equal to $2.5 trillion and the federal government then runs a deficit of $100 billion. What is the new level of gross national debt? If 100 percent of this deficit is financed by the sale of securities to the public, what happens to the level of debt held by the public? What happens to the level of gross debt? 3. If GDP increases by 6 percent in the same year as the deficit is run, what happens to the gross debt as a percentage of GDP? What happens to the level of debt held by the public as a percentage of GDP?arrow_forwardConsider the following data about government debt and deficit in a given year - real interest rate on government bonds = 1% -growth rate of real GDP = 1% - current debt-to-GDP ratio = 25% - primary budget deficit as a percentage of GDP = 2% Over this one-year period the debt-to-GDP ratio will have O A. risen by 0.2 percentage points. OB. remained unchanged. OC. risen by 2 percentage points. OD. fallen by 2 percentage points. O E. fallen by 0.2 percentage points.arrow_forward10. Study Questions and Problems #10 Evaluate the following statement explaining why our grandchildren may not suffer the entire burden of a federal deficit. True or False: The burden of the national debt on present and future generations depends on who owns the accumulated national debt. If the debt is owned internally, then debt payment is simply a transfer of income between households in the nation in the future. O True O False portion of available tax If, over time, real government budget deficit remains unchanged, and national debt continues to increase, a dollars will be spent on interest payments on the debt, and as a result, can be spent on highways, health care, defense, and other public-sector programs.arrow_forward
- Q No.3 What we mean by Economic dues in case of Fiscal Policy in Islamic Economy? Discuss the function of Economic dues in the context of Zakah as a non-discretionary fiscal policy tool of Islamic Economy.arrow_forwardExplain how each of the following will affect the net public debt, other things being equal. Previously, the government operated with a balanced budget, but recently there has been a sudden increase in federal tax collections. The government had been operating with a very small annual budget deficit until three hurricanes hit the Atlantic Coast, and now government spending has risen substantially. c. The Government National Mortgage Association, a federal government agency that purchases certain types of home mortgages, buys U.S. Treasury bonds from another government agency.arrow_forwardWhich of the following is true? O A) budget deficit is an accumulation of all prior budget national debts B) budget deficit is an accumulation of all prior budget national debts minus national surpluses OO budget deficit and national debt are the same thing. D) national debt is an accumulation of all prior budget deficits minus budget surplusesarrow_forward
- Suppose the federal government had budget deficits of $40 billion in year 1 and $50 billion in year 2 but had budget surpluses of $35 billion in year 3 and $50 billion in year 4. Also assume that it used its budget surpluses to pay down the public debt. At the end of these four years the federal governments public debt would have A.) increased by $5 Billion B) increased by $90 billion C.) decreased by $85 billion D) decreased by $5 billionarrow_forward10. Compare and contrast the different forms of fiscal policy. Expansionary Fiscal Policy Contractionary Fiscal Policy Government Spending Taxes Aggregate Demand National Debt Economic Growth Inflation Employmentarrow_forwardRefer to the tax table below. If your taxable income is $8,000, your average and marginal tax rates are Taxable Income Total Tax $ 2,000 $ 200 4,000 600 6,000 1,200 8,000 2,000 10,500 3,000 25% average rate and 25% marginal rate on additional income. 25% average rate and 40% marginal rate on additional income. 20% average rate and 30% marginal rate on additional income. 25% average rate with a marginal rate that can not be determined.arrow_forward
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