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China Debt
China Debt for the quiz on Friday, November 30th
Question | Answer |
---|---|
As of June 2012, how much US debt did China own? Actual dollars? | $1 trillion |
Who else owns US debt? | American people, or by the U.S. government to itself. |
Why would China want its currency weaker than the US dollar? | This keeps products exported from China cheaper than U.S. products, creating jobs for the Chinese people. |
Why won't China cash in all of its debt to the US at once? | the demand for the dollar would plummet and China's economy would suffer along with everyone else's. |
What are treasury notes | AKA bond. The government sells the notes to someone and the person/company/country holds the note for a certain amount of time. The note purchaser gets a fixed interest rate paid back yearly or semi-yearly. |
What are the three largest economies in the world? in order? | U.S, European Union, then China |
Why can China pay its workers so little? | They have a low standard of living. |
What is China's yearly average income? What is the US's? | China- $8,500 per person. U.S- 49,000 per person. |
Why do large companies have to sell bonds instead of borrowing from banks? | Banks don’t have enough money. |
Who issues bonds and who invests in them? | Governments and businesses sell bonds. Anyone can invest in them. |
Why would anyone buy a bond in the first place? | You are guaranteed to get your money back plus interest. |
If you bought a bond for $1000 with a coupon of 10% and a maturity of two years. What would be the total money you have back at the end of two years? | $100 for year one, $100 for year two, plus your $1000 back at the end of year two equals $1200 |
If you bought a bond for $100 with a coupon of 5% and a maturity of five years. What would be the total money you have back at the end of two years? | $20 for each year = $100 plus your original $100 = a total of $200 |
If you bought a bond for $250 with a coupon of 2% and a maturity of twenty years. What would be the total money you have back at the end of two years? | $5 for each year = $100 plus your original $250 = a total of $350 |
In your own words, define GDP. Not just Gross Domestic Product, but what does it mean? You may have to google it | the total amount of goods or services produced in a year in a country |
Write out 16 trillion. How many zeros are in a trillion? | 16,000,000,000,000 twelve zeroes |
How does a country get in debt? | several rounds of tax cuts, the war on terrorism, and a Medicare prescription drug benefit -- all of which were financed through borrowing. We didn’t make enough in taxes to cover what we have spent it on. |
entitlement spending | Money the government pays for people who qualify as low-income. E.g. Welfare, food stamps. |
Why did the US originally borrow money? | to pay for declared wars |
debt ceiling | The agreed-upon amount that the government can borrow. If they try to borrow more, Congress will not allow it. |
What does Obama think about the national debt ceiling? | Voted against it when he was a senator, but now supports it. |
How could opening the borders help the US get out of debt? | could raise productivity. |
How could raising taxes help the US get out of debt? | could get the government more money to pay its debts. |
How could reducing regulations help the US get out of debt? | could make it easier for businesses to stay in the US and not be outsourced. |
How could closing tax loopholes for the wealthy help the US get out of debt? | could save around $1 trillion. |
Why do US companies hire Chinese workers to manufacture their goods? | Chinese workers get paid so little, that it is cheaper to hire them and ship the goods all the way from China than to hire an American. |
What is medicare? | Free healthcare for the elderly |
What is the US minimum wage? | $7.25 hr |
What is another name for a treasury note? | Bond |
Which foreign country owns most of the US debt? | China |
What is debt? | When you owe someone money |
What is interest? | A certain amount paid back to you each year for lending money. |
How is interest usually paid? | As a percentage as the total borrowed. |
What is a debtor? | A person or company that lends money. |
What is tax revenue? | Money made by the government from taxes. |
What is a deficit? | When you spend more money than you take in. |
Why did congress let the debt get so big? | They want to get reelected, so they vote to spend more and tax less to keep their constituents happy. The constituents get more benefits and don't pay more taxes. |
What is a constituent? | A voter who is in a representative's district. |
Which presidential candidate in the 1990s warned about the upcoming debt crisis? | Ross Perot |
What is the current retirement age? | 65 |
What is social security? | Money that Americans pay in taxes that is invested by the government. When they retire, they get that money back to retire on. |
What is the difference between medicare and medicaid? | Medicare is for elderly people, medicaid is for anyone that is very sick or disabled |
What are labor regulations? | Rules that businesses must play by including minimum wage, environmental rules and benefits they must pay their workers. |
How much could the government save if they stopped tax loopholes for the wealthy? | 1 trillion |
What is a national sales tax? | A certain percent that everyone must pay on everything they buy. |
What are income taxes? | A certain amount of taxes you must pay based on your income. |
What are property taxes? | A certain amount of taxes you must pay for large things you buy like cars, boats and houses. |
What is China's currency called? | Yuan |