Macro Economics Chapter 13 Key Words

Question 1

crowding-in effect

Answer 1

An 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. Businesses investment spending increases because of optimistic profit expectations.

Question 2

crowding-out effect

Answer 2

A 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 3

debt ceiling

Answer 3

A legislated legal limit on the national debt.

Question 4

external national debt

Answer 4

The portion of the national debt owed to foreign citizens.

Question 5

internal national debt

Answer 5

The portion of the national debt owed to a nation’s own citizens.

Question 6

national debt

Answer 6

The total amount owed by the federal government to owners of government securities.

Question 7

net public debt

Answer 7

National debt minus all government interagency borrowing.