Economics of National Debt

Question 1

When increased demand for government bonds reduces supply of loanable funds for the private sector, this is called

Accepted Answer

Crowding-out

Question 2

Which of the following explains what happens to national debt when there is a budget deficit in a year?

Accepted Answer

The budget deficit will increase national debt

Question 3

After 2011, the UK govt tried to cut their fiscal deficit as a % of GDP. During this period, national debt

Accepted Answer

rose by a smaller percentage increase most years

Question 4

A balanced budget might be a desirable objective for governments because

Accepted Answer

it requires no borrowing, but the national debt still requires servicing

Question 5

Which of the following is the correct definition of a balanced budget?

Accepted Answer

Government revenue equals spending in a year

Question 6

Which country is home to the biggest sovereign wealth fund in the world?

Accepted Answer

Norway

Question 7

Which of these countries has a national debt above 100% of their GDP?

Accepted Answer

Greece, Italy, Japan

Question 8

In 2018, the Greek government debt stood at 181% of GDP. A major disadvantage of this is that

Accepted Answer

All of the above

Question 9

Which of these countries has a zero national debt?

Accepted Answer

Macao, Hong Kong

Question 10

To move an economy out of recession, an expansionary fiscal policy would include a(n)

Accepted Answer

increase in real value of welfare benefits

Question 11

If an economy suffers a recession, planned tax revenues

Accepted Answer

fall, thus increasing the budget deficit

Question 12

How much did the UK government spend on interest payments on their national debt last year?

Accepted Answer

£38 billion

Question 13

The best definition of national debt from those below is

Accepted Answer

Sum of accumulated fiscal deficits from past years not yet repaid

Question 14

According to Keynesians for which type of unemployment might an increased budget deficit be appropriate?

Accepted Answer

Cyclical

Question 15

In 2018, France’s government spending-to-GDP was 56%, whereas Germany’s was 43%. Higher state spending may

Accepted Answer

be financed by quantitative easing

Question 16

An undated government bond must be repaid after 50 years regardless of the price

Accepted Answer

False

Questions 16