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China Debt

China Debt for the quiz on Friday, November 30th

QuestionAnswer
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
Created by: rockcastle