Question

The government finances the budgetary deficit by A) from the public (through the sale of B) issued by the U.S. Treasury), or from other countries (such as China), or from the Federal Reserve System (we’ll get into that in the next module). People holding U.S. government Treasury Bills, Treausry notes and Treasury bonds are C) (lenders/borrowers – fill in the number from the word bank) to/from the federal government. The total amount owed by the federal government is known as the D) debt. Currently, about E) % (fill in whole number – no decimals or percentage sign) of this debt is held by foreigners or foreign governments. Not only must the government pay back this debt, but it also must pay F) while it holds the lenders money. In 2015, the interest on this debt was G) $ billion (fill in whole number).

Word Bank ECN 1030, Principles of Macroeconomics Quiz 5

1) Administrative 22) Lenders 2) Bonds 23) Less 3) Borrowers 24) More 4) Borrowing 25) Non-discretionary 5) Contractionary 26) Operational 6) Crowding-Out 27) Political 7) Decline 28) Private 8) Deficit(s) 29) Profit(s) 9) Demand 30) Public 10) Discretionary 31) Republican 11) Down 32) Recession 12) Economic 33) Recognition 13) Expansionary 34) Right 14) Fall 35) Rise 15) Fiscal 36) Spend(ing) 16) Income(s) 37) Surplus(es) 17) Increase(s) 38) System 18) Inflation 39) Tax(es)(ing) 19) Interest 40) Timing 20) Investment 41) Unemployment 21) Left 42) Up

Answer 1

1.

A

Debt from the public

B

Government securities, treasury bills or bonds

C

Lenders ($21 trillion debt)

D

National debt

E

45

F

Interest

G

$229

The US federal government takes debt from the public to bridge the gap of budgetary deficit. It can be done by issuing government securities to the US public, US institutions and foreign investors. Foreign countries are also the lender to the federal government that constitute to be 455 of the nation debt, as of now. The total interest payment is 229 Billion upon the total national debt of $21 trillion.

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