Question

Micah is creating a graph on government bonds and their impact on the national debt. If the government buys back bonds and incurs no additional debts, what is the graph MOST LIKELY to show?
A. The national debt is becoming a surplus
B. The national debt remains unchanged
C. The national debt is increasing.
D. The national debt is decreasing

Answer 1

Answer:

The correct answer is D. The national debt is decreasing.

Explanation:

National debt is called the set of debts that a given country owns to private external investors, other nations, buyers of domestic bonds, etc., that is, all the debts of that country.

These debts, logically, increase each time the government bids for new bonds or other financing instruments, which are acquired by investors. Therefore, if the government buys these bonds, logically the national debt will decrease.