Question 1

The national debt is the:

Accepted Answer

A) difference between a nation's exports and imports of goods and services. 
B) sum of the personal debt of all citizens in the United States. 
C) indebtedness of the federal government in the form of outstanding interest-earning government security. 
D) sum of the net personal debts of Americans to foreigners. 
A) difference between a nation's exports and imports of goods and services. 
B) sum of the personal debt of all citizens in the United States. 
C) indebtedness of the federal government in the form of outstanding interest-earning government security. 
D) sum of the net personal debts of Americans to foreigners.

Question 2

The percentage of the national debt held by foreigners is approximately 25 percent.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following U.S. Treasury securities represents ownership of the national debt?

Accepted Answer

A) Bonds owned by the banks and insurance companies. 
B) Bonds owned by private individuals. 
C) Bonds owned by foreigners. 
D) All of these. 
A) Bonds owned by the banks and insurance companies. 
B) Bonds owned by private individuals. 
C) Bonds owned by foreigners. 
D) All of these.

Question 4

Which of the following groups analyzes federal budgets proposals?

Accepted Answer

A) The Council of Economic Advisors. 
B) The Office of Management and Budget. 
C) The Congressional Budget Office. 
D) The House and Senate Budget Committees. 
A) The Council of Economic Advisors. 
B) The Office of Management and Budget. 
C) The Congressional Budget Office. 
D) The House and Senate Budget Committees.

Question 5

With regard to the national debt, to whom does the federal government owe money?

Accepted Answer

A) Taxpayers. 
B) Federal government workers. 
C) The Federal Reserve System. 
D) Investors who buy U.S. Treasury bills, bonds, and notes. 
A) Taxpayers. 
B) Federal government workers. 
C) The Federal Reserve System. 
D) Investors who buy U.S. Treasury bills, bonds, and notes.

Question 6

External debt refers to the portion of the national debt owned by private individuals and internal debt refers to that part owned by the public sector.

Accepted Answer

A) True 
 B)False

Question 7

Can the U.S. federal government go broke as a result of a large national debt?

Accepted Answer

The U.S. government cannot go broke beca

Question 8

"Crowding out" refers to federal government deficits financed by:

Accepted Answer

A) borrowing which increases interest rates and thereby reduces private spending. 
B) increasing taxes which reduces private spending. 
C) the federal government buying foreign debt which reduces the amount of government spending and government programs. 
D) reducing government spending which reduces interest rates. 
A) borrowing which increases interest rates and thereby reduces private spending. 
B) increasing taxes which reduces private spending. 
C) the federal government buying foreign debt which reduces the amount of government spending and government programs. 
D) reducing government spending which reduces interest rates.

Question 9

Which of the following owns the largest proportion of the national debt?

Accepted Answer

A) Foreigners. 
B) Federal, state, and local governments and the Federal Reserve. 
C) Private individuals, banks, and corporations. 
D) None of these. 
A) Foreigners. 
B) Federal, state, and local governments and the Federal Reserve. 
C) Private individuals, banks, and corporations. 
D) None of these.

Question 10

According to the crowding-out view, budget deficits will:

Accepted Answer

A) reduce interest rates. 
B) increase interest rates and retard private investment. 
C) reduce the investments of foreigners in the United States. 
D) increase the capital stock available to future generations. 
A) reduce interest rates. 
B) increase interest rates and retard private investment. 
C) reduce the investments of foreigners in the United States. 
D) increase the capital stock available to future generations.

Question 11

"Crowding in" refers to federal government deficits:

Accepted Answer

A) used for public infrastructure that will offset any decline in business investment. 
B) which reduce private business and consumption spending. 
C) which reduce future rates of economic growth. 
D) all of these. 
A) used for public infrastructure that will offset any decline in business investment. 
B) which reduce private business and consumption spending. 
C) which reduce future rates of economic growth. 
D) all of these.

Question 12

When the U. S. federal government runs a budget deficit, it borrows money by selling:

Accepted Answer

A) Treasury bills, notes, and bonds. 
B) publicly owned land. 
C) its gold reserves. 
D) financial assets located in foreign banks. 
A) Treasury bills, notes, and bonds. 
B) publicly owned land. 
C) its gold reserves. 
D) financial assets located in foreign banks.

Question 13

Currently, how much of the U.S. national debt is owed to foreigners?

Accepted Answer

A) About 2.5 percent. 
B) About 25 percent. 
C) About 30 percent. 
D) About 59 percent. 
A) About 2.5 percent. 
B) About 25 percent. 
C) About 30 percent. 
D) About 59 percent.

Question 14

It is important to distinguish between the privately held portion of the national debt and the portion held by government agencies and the Federal Reserve System because:

Accepted Answer

A) the government will not have to repay the privately held debt. 
B) only the privately held debt creates a net interest liability for the federal government. 
C) the privately held debt does not create a net interest liability for the federal government. 
D) taxes will have to be raised in order to pay the interest on the debt held by the Federal Reserve system. 
A) the government will not have to repay the privately held debt. 
B) only the privately held debt creates a net interest liability for the federal government. 
C) the privately held debt does not create a net interest liability for the federal government. 
D) taxes will have to be raised in order to pay the interest on the debt held by the Federal Reserve system.

Question 15

The national debt is best described as the:

Accepted Answer

A) amount by which this year's federal spending exceeds its taxes. 
B) value of all U. S. Treasury bonds owned by foreigners. 
C) sum of all federal budget deficits, past and present. 
D) percentage of GDP needed to finance a country's investment. 
A) amount by which this year's federal spending exceeds its taxes. 
B) value of all U. S. Treasury bonds owned by foreigners. 
C) sum of all federal budget deficits, past and present. 
D) percentage of GDP needed to finance a country's investment.

Question 16

Currently, the Social Security Trust Fund is running a:

Accepted Answer

A) deficit, which reduces the apparent size of the budget deficit. 
B) surplus, which reduces the apparent size of the budget deficit. 
C) surplus, which increases the apparent size of the budget deficit. 
D) deficit, which increases the apparent size of the budget deficit. 
A) deficit, which reduces the apparent size of the budget deficit. 
B) surplus, which reduces the apparent size of the budget deficit. 
C) surplus, which increases the apparent size of the budget deficit. 
D) deficit, which increases the apparent size of the budget deficit.

Question 17

If the federal government runs a budget deficit, but the budget deficit as a percent of GDP is less than the growth rate of real output, the:

Accepted Answer

A) national debt will decrease as a share of GDP. 
B) national debt will remain a constant share of GDP. 
C) national debt will increase as a share of GDP. 
D) size of the national debt (in dollar value)will decline. 
A) national debt will decrease as a share of GDP. 
B) national debt will remain a constant share of GDP. 
C) national debt will increase as a share of GDP. 
D) size of the national debt (in dollar value)will decline.

Question 18

When measured as a percentage of GDP, the U.S. national debt reached its highest levels as a result of:

Accepted Answer

A) World War II. 
B) The Vietnam War. 
C) The Reagan defense buildup and tax cut. 
D) The Bush economic recovery program. 
A) World War II. 
B) The Vietnam War. 
C) The Reagan defense buildup and tax cut. 
D) The Bush economic recovery program.

Question 19

Less of the federal debt is owned by federal, state, and local governments than is owned by foreigners.

Accepted Answer

A) True 
 B)False

Exam 13: Federal Deficits, Surpluses, and the National Debt

The national debt is the:

The percentage of the national debt held by foreigners is approximately 25 percent.

Which of the following U.S. Treasury securities represents ownership of the national debt?

Which of the following groups analyzes federal budgets proposals?

With regard to the national debt, to whom does the federal government owe money?

External debt refers to the portion of the national debt owned by private individuals and internal debt refers to that part owned by the public sector.

Can the U.S. federal government go broke as a result of a large national debt?

"Crowding out" refers to federal government deficits financed by:

Which of the following owns the largest proportion of the national debt?

According to the crowding-out view, budget deficits will:

"Crowding in" refers to federal government deficits:

When the U. S. federal government runs a budget deficit, it borrows money by selling:

Currently, how much of the U.S. national debt is owed to foreigners?

It is important to distinguish between the privately held portion of the national debt and the portion held by government agencies and the Federal Reserve System because:

The national debt is best described as the:

Currently, the Social Security Trust Fund is running a:

If the federal government runs a budget deficit, but the budget deficit as a percent of GDP is less than the growth rate of real output, the:

When measured as a percentage of GDP, the U.S. national debt reached its highest levels as a result of:

Less of the federal debt is owned by federal, state, and local governments than is owned by foreigners.

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Applying Graphs to Economics

Consumer Surplus, Producer Surplus, and Market Efficiency

the Self-Correcting Aggregate Demand and Supply Model

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

Filters