Question : What is the purpose of a debt ceiling?
Option 1: To limit the amount of debt that the government can incur
Option 2: To limit the amount of spending that the government can authorize
Option 3: To limit the amount of revenue that the government can collect
Option 4: To limit the amount of deficit spending that the government can engage in
Correct Answer: To limit the amount of debt that the government can incur
Solution : The correct answer is (a). To limit the amount of debt that the government can incur.
A debt ceiling is a legal limit set by the government on the amount of national debt that can be issued and outstanding at any given time. It restricts the total amount of money the government can borrow to finance its operations and obligations. The debt ceiling serves as a mechanism to control and monitor the level of debt and ensure that the government does not exceed a certain threshold.
When the government reaches the debt ceiling, it cannot borrow more money unless authorized by Congress to increase the limit. This limitation is intended to promote fiscal discipline and force policymakers to address the country's long-term fiscal situation.
Option 1: To limit the amount of debt the government can take on
Option 2: To encourage economic growth
Option 3: To decrease taxes
Option 4: To decrease government spending
Question : What is the difference between a budget deficit and a national debt?
Option 1: A budget deficit is the difference between government spending and revenue in a given year, while the national debt is the accumulation of all previous deficits
Option 2: A national debt is the difference between government spending and revenue in a given year, while a budget deficit is the accumulation of all previous deficits
Option 3: A budget deficit is a surplus in government spending, while a national debt is a deficit in government spending
Option 4: A national debt is a surplus in government spending, while a budget deficit is a deficit in government spending
Question : What is the difference between a deficit and a debt?
Option 1: A deficit is the amount by which spending exceeds revenue in a given year, while a debt is the total amount of money owed by the government
Option 2: A deficit is the total amount of money owed by the government, while a debt is the amount by which spending exceeds revenue in a given year
Option 3: A deficit is the amount of money owed to foreign countries, while a debt is the amount of money owed to domestic lenders
Option 4: A deficit is the amount of money owed to domestic lenders, while a debt is the amount of money owed to foreign countries
Question : Borrowings are equivalent to:
Option 1: Revenue receipts
Option 2: Revenue expenditure
Option 3: Primary deficit
Option 4: Fiscal deficit
Question : What is the purpose of a budget surplus?
Option 1: To pay down the national debt
Option 2: To increase government spending
Option 4: To encourage economic growth
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