22.The total value of Treasury bonds (T-bonds) in existence at any point in time

ID: 1225081 • Letter: 2

Question

22.The total value of Treasury bonds (T-bonds) in existence at any point in time is:

A. the federal government spending deficit.

B. the trade deficit.

C. less than government spending.

D. necessarily less than GDP.

E. the national debt.

23.If people's tax rate rises as their income rises, the tax is:

A. progressive.

B. proportional.

C. regressive.

D. a flat tax.

E. discriminatory.

24.Crowding out refers to the situation in which:

A. borrowing by the federal government raises interest rates, causing firms to invest less.

B. foreigners sell their bonds and purchase U.S. goods and services.

C. borrowing by the federal government causes state and local governments to lower their taxes.

D. increased federal taxes to balance the budget cause interest rates to increase, and consumer credit decreases.

E. the government purchases from foreign firms rather than domestic firms.

25.A concern about crowding out caused by increased government borrowing is that:

A. interest rates on private borrowing fall.

B. lower rates of economic growth can result from a decline in business investment spending.

C. the federal government may default on its loans.

D. foreign lenders find it less attractive to help finance federal deficits.

E. the displaced private consumption will create unemployment.

22. E National debt

23. Progressive

24, increased federal taxes to balance the budget cause interest rates to increase, and consumer credit decreases

25. lower rates of economic growth can result from a decline in business investment spending

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