QUESTION 1 \"Crowding in\" refers to federal government deficits: O used for pub

Question

QUESTION 1 "Crowding in" refers to federal government deficits: O used for public infrastructure that will offset any decline in business investment. O which reduce private business and consumption spending O which reduce future rates of economic growth. all of these. QUESTION 2 "Crowding out" refers to federal government deficits financed by: e borrowing which increases interest rates and thereby reduces private spending. increasing taxes which reduces private spending the federal government buying foreign debt which reduces the amount of government spending and government programs reducing government spending which reduces interest rates QUESTION 3 An increase in fiscal deficit spending financed by borrowing willIncrease the national debt True False QUESTION 4 Bonds owned by financia institutons represent ownerehlp of he hational debt by the private secp True False

Explanation / Answer

1) "Crowding in" refers to federal government deficits :
used for public infrastructure that will offset any decline in business investment
Explanation : it is defined when government deficits spur investment where government investment actually increases.

2) "Crowding out" refers to federal government deficits financed by
borrowing which increases interest rates and thereby reduces private spending
Explanation :Crowding out is the situation where increased interest rates lead to a reduction in private investmnet spending.

3)An increase in fiscal deficit spending financed by borrowing will increase the national debt
True
Explanation : any deficit which will be financed by borrowing will naturally increase the national debt as it will add to the money borrowed and repayment.

4) Bonds owned by financial institutions represent ownership of the national debt by the private sector
False
Explanation : It is not necessary that the bonds will be of national debt by the private sector only, it can belong to the financial institutions as well as the government sector too.

5) Since the US Government can continue to issue new treasry bonds, bills, and notes as old ones mature, we do not necessarily have to worry about suddenly have to pay back all of the national debt.
False
Explanation : Not necessary that the national debt need not be paid back suddenly. A debt is a debt, government issues bonds, bills etc for many other purposes too, but the debt need to be paid.

6)
Only the privately held debt creates a net interest liability for the federal government.

7)national debt
Explanation : All the deficits adds on to the debt. Past deficits of the federal budget always adds to the national debt which needs to be repaid.

8)the cumulative effect of all past budget deficits and surpluses of the federal government
Explanation : past budget deficits adds to the national debt, it is the debt owned by the government. So, it is the difference or cumulative effect of deficit and surpluses of the govt.

9) Treasure bonds
Explanation : treasury bonds are sold by the treasruy to cover up the fedral govt deficit

10) checkabale deposits
Explanation : M1 money includes cash, travelers cheques and all the checking deposits too.

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