The national debt is unlikely to cause national bankruptcy because the federal government can:
a. raise taxes.
b. print money.
c. refinance its debt.
d. all of these.
QUESTION 2Which of the following transactions would be recorded as a credit in the U.S. current account?
a. A Japanese bank's purchase of IBM stock.
b. A Japanese consumer's purchase of an Apple computer.
c. An American tourist's payment to a Japanese hotel.
d. An American consumer's purchase of a Toshiba VCR.
QUESTION 3The marginal propensity to save is:
a. the change in saving induced by a change in consumption.
b. (change in S) / (change in Y).
c. 1 MPC / MPC.
d. (change in Y bY) / (change in Y).
e. 1 MPC.
QUESTION 4What is the difference between the federal budget deficit and the national debt?
a. The budget deficit is the amount by which expenditures exceed revenues in a particular year, while the national debt is the cumulative effect of all past budget deficits and surpluses.
b. The budget deficit is the cumulative effect of all prior national debts.
c. The national debt includes all outstanding bonds, while the budget deficit excludes bonds held by government agencies.
d. This is a trick question because there is no difference between the budget deficit and the national debt.
QUESTION 5Which of the following is excluded in the current account?
a. Goods exports. b. Goods imports.
c. Capital inflow and outflow. d. Net unilateral transfers.
QUESTION 6The sum of the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) always equals:
a. 1.
b. 0.
c. the interest rate.
d. the marginal propensity to invest (MPI).