ECON 211 Chapter 13

Question 1

National Debt

Answer 1

Total amount owed by the federal government to owners of government securities

Question 2

Net public debt

Answer 2

National debt minus all government interagency borrowing

Question 3

Debt Ceiling

Answer 3

legislated legal limit on the national debt

Question 4

Internal National Debt

Answer 4

Portion of the national debt owed to a nation’s own citizens

Question 5

External National Debt

Answer 5

Portion of the national debt owed to foreign citizens

Question 6

Crowding-out effect

Answer 6

Reduction in private sector spending as a result of federal budget deficits financed by U.S. Treasury borrowing. When federal government borrowing increases interest rates, the result is lower consumption by households and lower investment spending by businesses.

Question 7

Crowding-in effect

Answer 7

Increase in private sector spending as a result of federal budget deficits financed by U.S. Treasury borrowing. At less than full employment consumers hold more treasury securities and this additional wealth causes them to spend more. Business investment spending increases because of optimistic profit expectations.