One reason the public debt will not bankrupt the federal government is that the:
A. burden of the debt will be crowded out by new investment.
B. debt can be refinanced by selling new bonds.
C. cost is shifted to future generations.
D. debt has a procyclical effect on the economy.
Answer: B
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The real GDP in a nation has just increased from $2 billion to $2.1 billion
A) This country has experienced economic growth because there is a $.1 billion increase in real GDP. B) We do not know if this country experienced economic growth since the increase in the population was not given. C) We do not know if this country experienced economic growth since information on nominal GDP was not given. D) This country did not experience economic growth since $.1 billion is not a large number.
The nominal interest rate is eight percent and the consumer price index rises from 140 to 147 . What is the real interest rate?