Debt Reduction- Advice On Credit Card Debt Reduction, Debt Reduction Services, And Debt Reduction Plans

jcai asked:


1) Despite reaching 62% of GDP in 2003, the national debt in the United States isn’t a huge concern for some economists and policymakers.
1a) Some economists believe that one of the reasons not to worry is that the bulk of the public debt is “internal national debt”–the portion of the national debt owed to a nation’s own citizens and institutions.
Why isn’t the portion of the national debt owed to a nation’s own citizens and institutions a large concern?
A. Because the government can collect money from its own citizens anytime
B. Because an internal national debt does not affect economic growth
C. Because future generations always can shoulder the debt burden
D. Because paying internal debt is a matter of income redistribution, so overall purchasing power in the economy doesn’t change

1b) Which of the following is a reason why the U.S. government need not worry about going bankrupt?
A. Because the United States is an ally to most countries in the world, it never has to pay off the debt.
B. Governments remain solvent so long as they keep their debt as a percentage of GDP below 100%.
C. The government can refinance the public debt easily and has the authority to collect taxes.
D. All the public debt is held by U.S. citizens, firms, or government institutions.

2) Crowding out occurs when:
A. An increase in the tax rate leads to lower tax revenue
B. The public debt drives up real interest rates, leading to a reduction in investment spending and a lower future capital stock
C. An increase in taxes reduces the incentive to work and lowers real GDP
D. Investment spending drives up interest rates, discouraging government borrowing

Thanks

Carol

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