QUESTION 1 The share of net public debt owed to foreign resi

QUESTION 1

The share of net public debt owed to foreign residents today is close to

100 percent.

50 percent.

10 percent.

80 percent.

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QUESTION 2

Which of the following is true of the portion of the net public debt held by foreign residents?

It will definitely be a burden on current and future generations of U.S. residents who will have to pay interest on this portion of the debt, thereby transferring a portion of future U.S. incomes abroad.

It will be a benefit to future generations of U.S. residents only if funds that the U.S. government obtains from borrowing are expended on projects with rates of return lower than the rates of interest that the government pays foreign residents

It will be a burden on future generations of U.S. residents only if funds that the U.S. government obtains from borrowing are expended on projects with rates of return lower than the rates of interest that the government pays foreign residents.

It will definitely be a benefit to current and future generations of U.S residents, because foreign residents have shown a willingness to lend to the U.S. government in exchange for rates of return significantly lower than they can receive elsewhere in the world.

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QUESTION 3

In the current year, a nation\'s government spending equals $1.5 trillion and its revenues are $1.9 trillion. Which of the following is true?

The nation has a current year trade surplus of $0.4 trillion.

The nation\'s national debt equals $0.4 trillion.

This nation has a current year budget surplus of $0.4 trillion.

This nation is currently running a budget deficit of $0.4 trillion.

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QUESTION 4

Since 2001, the U.S. government budget deficit

as a percentage of U.S. GDP has decreased steadily each year.

as a percentage of U.S. GDP has increased steadily each year.

has been approximately equal to 10% of U.S. GDP.

none of the above.

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QUESTION 5

The largest component of U.S. federal spending that contributes to the U.S. government budget deficit is

salaries of government employees.

interest expenses.

military spending.

entitlements.

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QUESTION 6

7.7 percent

5.9 percent

1.7 percent

2.0 percent

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QUESTION 7

The total value of all outstanding federal government securities is called

the budget deficit.

crowding out.

the public debt.

the trade deficit.

Solution

Ans1) the correct option is 50 percent.

Ans2) The correct option is It will be a burden on future generations of U.S. residents only if funds that the U.S. government obtains from borrowing are expended on projects with rates of return lower than the rates of interest that the government pays foreign residents

Ans3) the correct option is This nation has a current year budget surplus of $0.4 trillion. Budget surplus = revenue - spending = 1.9 - 1.5 = 0.4 trillion