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Chapter 23: Problem 8

Which of the following own a portion of the national debt? a. Federal, state, and local governments b. Private U.S. citizens c. Banks d. Foreigners e. All of the above

Short Answer

Expert verified
All the provided options (Federal, state, and local governments, Private U.S. citizens, Banks, and Foreigners) own a portion of the national debt. Therefore, the correct answer is e. All of the above.

Step by step solution

01

Understand the national debt

National debt is the total amount of money that a government owes to its creditors, which includes both domestic and foreign entities. It is accumulated over the years, mostly through the issuance of government securities like bonds or bills.
02

Identify the debt holders

National debt is typically purchased by various actors, such as: 1. Federal, state, and local governments: They buy debt either for their own investment portfolios or as a way to finance their spending needs. 2. Private U.S. citizens: They hold national debt in the form of savings bonds or as part of their retirement portfolios. 3. Banks: Financial institutions purchase national debt as investments or as collateral for various transactions. 4. Foreigners: Foreign entities like governments, central banks, or private investors buy U.S. debt as investments or as a way to maintain currency reserves.
03

Conclusion

Considering the explained debt holders in step 2, we can conclude that all mentioned options own a portion of the national debt. Therefore, the correct answer to this exercise is: e. All of the above

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Most popular questions from this chapter

During the late 1990 s, federal government budget deficits a. were completely removed. b. dropped significantly from a high of \(\$ 300\) billion. c. remained fairly stable at about \(\$ 150\) billion per year. d. exceeded \(\$ 200\) billion in each year.

The national debt in 2007 a. was about four times larger than in 1980 . b. was twice as large in 1980 . c. was approximately the same size in 1980 . d. was none of the above.

When measured as a percentage of GDP, the U.S. national debt reached its highest levels as a result of a. World War II. b. The Vietnam War. c. The Reagan defense buildup and tax cuts. d. The Bush economic recovery program.

The federal government finances a budget by a. taxing businesses and households. b. selling Treasury securities. c. printing more money. d. reducing its purchases of goods and services.

The national debt is unlikely to cause national bankruptcy because the a. national debt can be refinanced by issuing new bonds. b. interest on the public debt equals GDP. c. national debt cannot be shifted to future generations for repayment. d. federal government cannot repudiate the outstanding national debt.
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