ECONOMICS
FEDERAL RESERVE
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
intergovernmental revenue
|
|
|
flat tax
|
|
|
excise tax
|
|
|
national debt
|
Detailed explanation-1: -Federal or National Debt-the total amount borrowed from investors to finance deficit spending by the federal government.
Detailed explanation-2: -When a government borrows money, its debt increases. Whenever a government runs a budget deficit, it adds to its long-term debt. For example, suppose the government of Kashyyyk has a $200 million budget deficit one year, so it borrows money to pay for its budget deficit.
Detailed explanation-3: -The term government deficit implies increase in the debt of the government. In other words, if the government continues to borrow to finance deficit, it leads to additional debt.
Detailed explanation-4: -The primary deficit adds to the national debt and the positive difference between the interest rate and the growth rate of GDP means that the interest payments alone cause the debt to rise faster than GDP.