If all U.S. government bonds are held by U.S. citizens, then?

Question

If all U.S. government bonds are held by U.S. citizens, then

a. there is no net change in national wealth when the national debt changes.

b. the bondholders earn no interest income.

c. government bonds are worthless.

d. the tax liability for funding the debt is not offset by the interest earnings of bondholders.

e. there is no tax liability for funding the debt.

All the following are potential costs of the U.S. national debt except

a. foreign-held debt that must be repaid.

b. a higher international trade deficit.

c. lower inflation in the future.

d. higher interest rates that discourage private investment.

e. reduced domestic wealth in the future.

If fewer businesses offered new bonds to raise investment funds because government borrowing had increased interest rates, this would be an example of

a. the balanced-budget multiplier.

b. overestimating the tax multiplier.

c. Ricardian equivalence.

d. crowding out.

e. an increase in consumption

Answer 1

I didn't come here to take a test.

The answer is simply that if all the debt were held by US citizens, there will be a helluva lot of our citizens wiped out when the ponzi scam collapses.

Answer 2

A, C, D