Which of the following is NOT a problem with excessive debt?
A) It worsens the central government's budget position by adding large debt service payments to other budget items.
B) It reduces the quantity of resources available to invest in economic development.
C) If debt service is substantial, schools, health clinics, roads, ports, other infrastructure, and social needs are less likely to be addressed.
D) It can reduce the chance of a crisis.
D
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The United States currently is
A) a debtor nation and has been since the end of World War II in 1945. B) a creditor nation and has been since the end of World War II in 1945. C) a debtor nation and has been since 1989. D) a creditor nation and has been one since 1989. E) neither a debtor nation nor a creditor nation.
Under a fixed exchange rate system, if the inflation rate in the United States is 5 percent a year and the inflation rate in Australia is 0 percent a year, then the U.S. real exchange rate will
A) increase 5 percent a year. B) decrease 5 percent a year. C) remain constant. D) possibly increase or decrease.