Impact of national debt that has to be paid off.

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Answer 1

Question

Chapter ST7, Problem 1CQ

To determine

Impact of national debt that has to be paid off.

Expert Solution & Answer

Explanation of Solution

The national debt is the amount of debt that the government owes to the public as well as to other institutions and agencies. The debt would be taken through borrowings such as the treasury bonds and other financial instruments by the government for meeting the fiscal deficit. The national debt will not be paid off because it will be financed and refinanced according to the needs of the government.

The debt can be refinanced when the creditor has faith in the debtor. The refinancing would help to restore the debt and that helps to continual debt outstanding. The national debt is not a serious issue to the economy as long as the interest paid for the national debt is below the potential GDP of the economy. When it goes higher, then the ability to pay by the borrower will be questioned and that would make the case complicated. Otherwise, the borrower can finance and refinance the national debt. It is being practiced widely by all the countries.

Economics Concept Introduction

National debt: The national debt is the summation of the debt owned by the government to the public and the other agencies of the economy.

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In a classic oil-drilling example, you are trying to decide whether to drill for oil on a field that might or might not contain any oil. Before making this decision, you have the option of hiring a geologist to perform some seismic tests and then predict whether there is any oil or not. You assess that if there is actually oil, the geologist will predict there is oil with probability 0.85 . You also assess that if there is no oil, the geologist will predict there is no oil with probability 0.90. Please answer the two questions below, as I am trying to ensure that I am correct. 1. Why will these two probabilities not appear on the decision tree? 2. Which probabilities will be on the decision tree?

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Answer 2

Question

Chapter ST7, Problem 1CQ

To determine

Impact of national debt that has to be paid off.

Expert Solution & Answer

Explanation of Solution

The national debt is the amount of debt that the government owes to the public as well as to other institutions and agencies. The debt would be taken through borrowings such as the treasury bonds and other financial instruments by the government for meeting the fiscal deficit. The national debt will not be paid off because it will be financed and refinanced according to the needs of the government.

The debt can be refinanced when the creditor has faith in the debtor. The refinancing would help to restore the debt and that helps to continual debt outstanding. The national debt is not a serious issue to the economy as long as the interest paid for the national debt is below the potential GDP of the economy. When it goes higher, then the ability to pay by the borrower will be questioned and that would make the case complicated. Otherwise, the borrower can finance and refinance the national debt. It is being practiced widely by all the countries.

Economics Concept Introduction

National debt: The national debt is the summation of the debt owned by the government to the public and the other agencies of the economy.

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Answer 3

Question

Chapter ST7, Problem 1CQ

To determine

Impact of national debt that has to be paid off.

Expert Solution & Answer

Explanation of Solution

The national debt is the amount of debt that the government owes to the public as well as to other institutions and agencies. The debt would be taken through borrowings such as the treasury bonds and other financial instruments by the government for meeting the fiscal deficit. The national debt will not be paid off because it will be financed and refinanced according to the needs of the government.

The debt can be refinanced when the creditor has faith in the debtor. The refinancing would help to restore the debt and that helps to continual debt outstanding. The national debt is not a serious issue to the economy as long as the interest paid for the national debt is below the potential GDP of the economy. When it goes higher, then the ability to pay by the borrower will be questioned and that would make the case complicated. Otherwise, the borrower can finance and refinance the national debt. It is being practiced widely by all the countries.

Economics Concept Introduction

National debt: The national debt is the summation of the debt owned by the government to the public and the other agencies of the economy.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter ST7, Problem 1CQ

To determine

Impact of national debt that has to be paid off.

Expert Solution & Answer

Explanation of Solution

The national debt is the amount of debt that the government owes to the public as well as to other institutions and agencies. The debt would be taken through borrowings such as the treasury bonds and other financial instruments by the government for meeting the fiscal deficit. The national debt will not be paid off because it will be financed and refinanced according to the needs of the government.

The debt can be refinanced when the creditor has faith in the debtor. The refinancing would help to restore the debt and that helps to continual debt outstanding. The national debt is not a serious issue to the economy as long as the interest paid for the national debt is below the potential GDP of the economy. When it goes higher, then the ability to pay by the borrower will be questioned and that would make the case complicated. Otherwise, the borrower can finance and refinance the national debt. It is being practiced widely by all the countries.

Economics Concept Introduction

National debt: The national debt is the summation of the debt owned by the government to the public and the other agencies of the economy.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter ST7, Problem 1CQ

To determine

Impact of national debt that has to be paid off.

Expert Solution & Answer

Explanation of Solution

The national debt is the amount of debt that the government owes to the public as well as to other institutions and agencies. The debt would be taken through borrowings such as the treasury bonds and other financial instruments by the government for meeting the fiscal deficit. The national debt will not be paid off because it will be financed and refinanced according to the needs of the government.

The debt can be refinanced when the creditor has faith in the debtor. The refinancing would help to restore the debt and that helps to continual debt outstanding. The national debt is not a serious issue to the economy as long as the interest paid for the national debt is below the potential GDP of the economy. When it goes higher, then the ability to pay by the borrower will be questioned and that would make the case complicated. Otherwise, the borrower can finance and refinance the national debt. It is being practiced widely by all the countries.

Economics Concept Introduction

National debt: The national debt is the summation of the debt owned by the government to the public and the other agencies of the economy.

Answer 6

Chapter ST7, Problem 1CQ

To determine

Impact of national debt that has to be paid off.

Expert Solution & Answer

Explanation of Solution

The national debt is the amount of debt that the government owes to the public as well as to other institutions and agencies. The debt would be taken through borrowings such as the treasury bonds and other financial instruments by the government for meeting the fiscal deficit. The national debt will not be paid off because it will be financed and refinanced according to the needs of the government.

The debt can be refinanced when the creditor has faith in the debtor. The refinancing would help to restore the debt and that helps to continual debt outstanding. The national debt is not a serious issue to the economy as long as the interest paid for the national debt is below the potential GDP of the economy. When it goes higher, then the ability to pay by the borrower will be questioned and that would make the case complicated. Otherwise, the borrower can finance and refinance the national debt. It is being practiced widely by all the countries.

Economics Concept Introduction

National debt: The national debt is the summation of the debt owned by the government to the public and the other agencies of the economy.

Answer 7

Chapter ST7, Problem 1CQ

To determine

Impact of national debt that has to be paid off.

Answer 8

Expert Solution & Answer

Explanation of Solution

The national debt is the amount of debt that the government owes to the public as well as to other institutions and agencies. The debt would be taken through borrowings such as the treasury bonds and other financial instruments by the government for meeting the fiscal deficit. The national debt will not be paid off because it will be financed and refinanced according to the needs of the government.

The debt can be refinanced when the creditor has faith in the debtor. The refinancing would help to restore the debt and that helps to continual debt outstanding. The national debt is not a serious issue to the economy as long as the interest paid for the national debt is below the potential GDP of the economy. When it goes higher, then the ability to pay by the borrower will be questioned and that would make the case complicated. Otherwise, the borrower can finance and refinance the national debt. It is being practiced widely by all the countries.