Question 1

Which of the following is TRUE for the U.S.national debt held by the public as a portion of GNP?

Accepted Answer

A) it reached an all-time high in 2009 
B) it increased steadily from 1960 to 2013 
C) it was roughly 66 percent in 2013 
D) it approximately doubled first from 1980 to 1992 and again from 2000 to 2010, but declined throughout most of the 1990s 
E) it declined steadily from 1990 to 2008 but then increased again sharply 
A) it reached an all-time high in 2009 
B) it increased steadily from 1960 to 2013 
C) it was roughly 66 percent in 2013 
D) it approximately doubled first from 1980 to 1992 and again from 2000 to 2010, but declined throughout most of the 1990s 
E) it declined steadily from 1990 to 2008 but then increased again sharply D

Question 2

In 2012, how much of the gross U.S.national debt was held by the public?

Accepted Answer

A) 32 percent 
B) 46 percent 
C) 58 percent 
D) 77 percent 
E) 92 percent 
A) 32 percent 
B) 46 percent 
C) 58 percent 
D) 77 percent 
E) 92 percent D

Question 3

Between 2000 and 2009, total U.S.federal revenues were on average

Accepted Answer

A) 16.2 percent of GDP 
B) 15.6 percent of GDP 
C) 17.6 percent of GDP 
D) 18.8 percent of GDP 
E) 20.4 percent of GDP 
A) 16.2 percent of GDP 
B) 15.6 percent of GDP 
C) 17.6 percent of GDP 
D) 18.8 percent of GDP 
E) 20.4 percent of GDP C

Question 4

If we compare the sources of U.S.federal revenue as a percentage of GDP from 1960-69 and from 2000-09, we see that on average

Accepted Answer

A) individual income tax revenue was lower in 2000-09 
B) corporate income tax revenue was higher in 2000-09 
C) corporate income tax revenue was roughly the same in both periods 
D) social insurance taxes were lower in 2000-09 
E) none of the above 
A) individual income tax revenue was lower in 2000-09 
B) corporate income tax revenue was higher in 2000-09 
C) corporate income tax revenue was roughly the same in both periods 
D) social insurance taxes were lower in 2000-09 
E) none of the above

Question 5

From 1960 to 2010, the share of total government spending in GDP

Accepted Answer

A) remained fairly stable 
B) increased from about 15 percent to about 25 percent 
C) increased from about 23 percent to about 35 percent 
D) 18.8 percent of GDP 
E) 20.4 percent of GDP 
A) remained fairly stable 
B) increased from about 15 percent to about 25 percent 
C) increased from about 23 percent to about 35 percent 
D) 18.8 percent of GDP 
E) 20.4 percent of GDP

Question 6

The greatest burden of an increasing national debt generally is that

Accepted Answer

A) it will eventually have to be money-financed which will cause inflation to increase 
B) citizens will have to be taxed more to pay the interest on government securities 
C) the government will have to print more money to pay off the debt 
D) future living standards will be lower since the rise in interest rates caused by the increased government demand for credit will crowd out private investment 
E) people will lower their current consumption in anticipation of future tax increases 
A) it will eventually have to be money-financed which will cause inflation to increase 
B) citizens will have to be taxed more to pay the interest on government securities 
C) the government will have to print more money to pay off the debt 
D) future living standards will be lower since the rise in interest rates caused by the increased government demand for credit will crowd out private investment 
E) people will lower their current consumption in anticipation of future tax increases

Question 7

At the end of World War II, the U.S.debt-to-GDP ratio was much higher than it was in 2013 but there was no talk of a "fiscal cliff." This was because

Accepted Answer

A) there was no legal debt ceiling in the U.S. in the 1940s 
B) it was assumed that the anticipated reduction in budget deficits combined with economic growth would reduce the ratio quickly 
C) financial investors believed in the ability of the U.S. government to eventually pay off its creditors 
D) all of the above 
E) none of the above 
A) there was no legal debt ceiling in the U.S. in the 1940s 
B) it was assumed that the anticipated reduction in budget deficits combined with economic growth would reduce the ratio quickly 
C) financial investors believed in the ability of the U.S. government to eventually pay off its creditors 
D) all of the above 
E) none of the above

Question 8

From 2000 to 2009, average U.S.federal government outlays on national defense totaled

Accepted Answer

A) 1)2 percent of GDP 
B) 2)4 percent of GDP 
C) 3)8 percent of GDP 
D) 4)9 percent of GDP 
E) 6)9 percent of GDP 
A) 1)2 percent of GDP 
B) 2)4 percent of GDP 
C) 3)8 percent of GDP 
D) 4)9 percent of GDP 
E) 6)9 percent of GDP

Question 9

Even though the national debt is rising, the debt-to-GDP ratio will fall as long as

Accepted Answer

A) interest payments on the national debt as a fraction of government spending remain constant 
B) the real interest rate exceeds the economic growth rate and the primary budget is balanced 
C) the real interest rate is lower than the economic growth rate and the primary deficit is zero 
D) the debt is growing more slowly than the federal budget deficit 
E) the primary budget deficit as a share of GDP is not growing 
A) interest payments on the national debt as a fraction of government spending remain constant 
B) the real interest rate exceeds the economic growth rate and the primary budget is balanced 
C) the real interest rate is lower than the economic growth rate and the primary deficit is zero 
D) the debt is growing more slowly than the federal budget deficit 
E) the primary budget deficit as a share of GDP is not growing

Question 10

If we look at interest payments on the U.S.national debt as a fraction of GDP since World War II, we realize that they

Accepted Answer

A) increased slightly but consistently as the national debt increased in size 
B) increased from less than 2% 1980 to more than 3% in 1990 
C) were higher between 2000 - 2010 than in any previous decade 
D) always exceeded 2% 
E) never exceeded 2% 
A) increased slightly but consistently as the national debt increased in size 
B) increased from less than 2% 1980 to more than 3% in 1990 
C) were higher between 2000 - 2010 than in any previous decade 
D) always exceeded 2% 
E) never exceeded 2%

Question 11

Which of the following countries had the HIGHEST debt-to-GDP ratio in 2010

Accepted Answer

A) Greece 
B) Ireland 
C) Italy 
D) Portugal 
E) Spain 
A) Greece 
B) Ireland 
C) Italy 
D) Portugal 
E) Spain

Question 12

An increase in the national debt creates a burden on future generations because

Accepted Answer

A) the government will have to sell off its assets to pay off the debt 
B) future tax rates will have to be increased to pay off domestic government bondholders 
C) the Fed will have to monetize the debt, which will lead to higher interest rates 
D) the capital stock will be lower than it would have been without the debt increase 
E) interest payments on the national debt will increase the primary deficit even further 
A) the government will have to sell off its assets to pay off the debt 
B) future tax rates will have to be increased to pay off domestic government bondholders 
C) the Fed will have to monetize the debt, which will lead to higher interest rates 
D) the capital stock will be lower than it would have been without the debt increase 
E) interest payments on the national debt will increase the primary deficit even further

Question 13

In the period of 2000-2009, the largest share of total federal government outlays in the U.S.was devoted to

Accepted Answer

A) national defense 
B) entitlement programs and other mandatory spending 
C) non-defense discretionary spending 
D) net interest payments on the national debt 
E) foreign aid 
A) national defense 
B) entitlement programs and other mandatory spending 
C) non-defense discretionary spending 
D) net interest payments on the national debt 
E) foreign aid

Question 14

Which of the following is FALSE about long-term interest rates in Europe?

Accepted Answer

A) they decreased in most countries in the mid and late 1990s 
B) they were similar in many countries from 2001-06 
C) they increased sharply in all countries after 2006 
D) they increased for some but not all countries after 2009 
E) all of the above 
A) they decreased in most countries in the mid and late 1990s 
B) they were similar in many countries from 2001-06 
C) they increased sharply in all countries after 2006 
D) they increased for some but not all countries after 2009 
E) all of the above

Question 15

When the U.S.Treasury engages in debt financing,

Accepted Answer

A) it borrows directly from the Federal Reserve 
B) it sells some of its assets, such as federally owned land 
C) it sells securities to the public 
D) short-term interest rates automatically decrease 
E) taxes have to be increased 
A) it borrows directly from the Federal Reserve 
B) it sells some of its assets, such as federally owned land 
C) it sells securities to the public 
D) short-term interest rates automatically decrease 
E) taxes have to be increased

Question 16

Which of the following is TRUE?

Accepted Answer

A) the average nominal interest rate on the debt was higher in 1980 than in 2010 
B) the real interest rate was higher in 1980 than in 2010 
C) real interest payments as a percentage of government spending were higher in 1980 than in 2010 
D) nominal interest payments as a percentage of government spending were lower in 1980 than in 2010 
E) none of the above 
A) the average nominal interest rate on the debt was higher in 1980 than in 2010 
B) the real interest rate was higher in 1980 than in 2010 
C) real interest payments as a percentage of government spending were higher in 1980 than in 2010 
D) nominal interest payments as a percentage of government spending were lower in 1980 than in 2010 
E) none of the above

Question 17

In 2011, what portion of the U.S.public debt was owned by international investors?

Accepted Answer

A) 66 percent 
B) 46 percent 
C) 36 percent 
D) 16 percent 
E) 6 percent 
A) 66 percent 
B) 46 percent 
C) 36 percent 
D) 16 percent 
E) 6 percent

Question 18

Most debt issues by the Treasury are made to

Accepted Answer

A) refinance parts of the national debt that are maturing 
B) finance entitlement programs 
C) finance defense spending 
D) provide more liquidity for financial markets 
E) monetize the debt 
A) refinance parts of the national debt that are maturing 
B) finance entitlement programs 
C) finance defense spending 
D) provide more liquidity for financial markets 
E) monetize the debt

Question 19

Between 2009 and 2011, long-term interest rates in Greece went from 5.2 percent to

Accepted Answer

A) 20.8 percent 
B) 15.7 percent 
C) 12.8 percent 
D) 9)7 percent 
E) 6)6 percent 
A) 20.8 percent 
B) 15.7 percent 
C) 12.8 percent 
D) 9)7 percent 
E) 6)6 percent

Question 20

Between 1945 and 2010, the average interest rate on the U.S.national debt

Accepted Answer

A) increased slightly but consistently 
B) decreased consistently despite an increasing national debt 
C) followed roughly the same pattern as the debt-to-GDP ratio 
D) peaked in the early 1980s 
E) never exceeded 6 percent 
A) increased slightly but consistently 
B) decreased consistently despite an increasing national debt 
C) followed roughly the same pattern as the debt-to-GDP ratio 
D) peaked in the early 1980s 
E) never exceeded 6 percent

Exam 20: The national debt

Which of the following is TRUE for the U.S.national debt held by the public as a portion of GNP?

In 2012, how much of the gross U.S.national debt was held by the public?

Between 2000 and 2009, total U.S.federal revenues were on average

If we compare the sources of U.S.federal revenue as a percentage of GDP from 1960-69 and from 2000-09, we see that on average

From 1960 to 2010, the share of total government spending in GDP

The greatest burden of an increasing national debt generally is that

At the end of World War II, the U.S.debt-to-GDP ratio was much higher than it was in 2013 but there was no talk of a "fiscal cliff." This was because

From 2000 to 2009, average U.S.federal government outlays on national defense totaled

Even though the national debt is rising, the debt-to-GDP ratio will fall as long as

If we look at interest payments on the U.S.national debt as a fraction of GDP since World War II, we realize that they

Which of the following countries had the HIGHEST debt-to-GDP ratio in 2010

An increase in the national debt creates a burden on future generations because

In the period of 2000-2009, the largest share of total federal government outlays in the U.S.was devoted to

Which of the following is FALSE about long-term interest rates in Europe?

When the U.S.Treasury engages in debt financing,

Which of the following is TRUE?

In 2011, what portion of the U.S.public debt was owned by international investors?

Most debt issues by the Treasury are made to

Between 2009 and 2011, long-term interest rates in Greece went from 5.2 percent to

Between 1945 and 2010, the average interest rate on the U.S.national debt

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