Sustainable Debt Mini Reading

What is the main source of income for governments?

• Sale of government property

• Stamp duties

• Sale of national goods and services

• Taxing personal and business incomes

How is government debt measured as a percentage of GDP?

• Debt divided by GDP

• Debt multiplied by GDP

• GDP divided by debt

• Debt divided by population

What does a high debt-to-GDP ratio indicate?

• Low risk of default

• High risk of default

• Stable economy

• Increased government spending

What is a budget deficit?

• When government spending exceeds revenues

• When government revenues exceed expenditures

• When government borrows money

• When government debt is paid off

What is the impact of a high government debt on future taxation and spending?

• No impact on taxes or spending

• Increased taxes and decreased spending

• Decreased taxes and increased spending

• Increased taxes and increased spending

How are government bonds rated for reliability?

• By the World Bank

• By the government itself

• By credit rating agencies

• By international banks

What is the opportunity cost of servicing government debt?

• Increased government revenue

• Increased investment in economic growth

• Decreased investment in economic growth

• No impact on investment

What is considered when determining the sustainability of national debt?

• Political stability, debt composition, and external shocks

• Population growth, technological advancements, and education levels

• Interest rates, GDP growth, and inflation

• Credit ratings, trade surplus, and government revenue

How did Japan manage its high debt levels compared to Greece?

• By attracting foreign investors

• By borrowing from international banks

• By increasing taxes

• By owing debt internally

What is the key indicator used to assess the sustainability of national debt?

• Government budget surplus

• Inflation rate

• Debt-to-GDP ratio

• Population growth rate