5. Answer the following questions:

1. What creates the national debt?

2. Who bears the burden of the national debt?

3. What does the national debt represent?

4. Why does the U.S. Treasury sell its bonds?

5. How much does the external debt account for?

6. What are the mechanisms for curbing the national debt?

5. Define the terms:

budget deficit internal debt

Treasury bonds external debt

national debt refinancing

liability deficit ceiling

asset debt ceiling

5. Translate into English:

1. Купуючи казначейські облігації, люди позичають гроші урядові. 2. Президент Франклін Рузвельт обіцяв збалансу­вати федеральний бюджет, але не зміг зупинити зростання дефіциту бюджету. 3. У період з 1790 до 1917 року дер­жавний борг США перевищував валовий національний про­дукт лише в роки громадянської війни. 4, Однак після 1917 ро­ку розмір дефіциту різко зріс. 5. Уряд США володіє 1/3 усіх казначейських облігацій. 6. На приватний сектор припа­дає майже половина державного боргу. 7. Іноземні позики підвищують рівень споживання, інвестицій і фінансування.

8. Сполучені Штати Америки використовують позики для фінансування урядових витрат.

5. Read and dramatize the following dialogue:

1. : It may be comforting to know that most of the U.S. national debt is owned internally, and much of it by the government itself.

S.: How much of a «burden» does the debt really represent?

1. : It is not so evident. None of the debt has been repaid since you were bom. The federal government has borrowed more money each year fo finance deficits, adding to accu­mulated debt.

2. : I see, the federal government has simply borrowed new funds to pay debts off, but every debt requires debt- servicing.

1. : Yes, with $3 trillion in accumulated debt, the U.S. government must make enormous interest payments each year. In 1991 the U.S. Treasury paid over $173 billion in interest charges.

S.: Who gets the interest payments?

1. ; As noted, most of the nation's outstanding debt is internal — that is owned by domestic households and institutions. Therefore most interest payments are made to people and institutions within the United States. Most debt servicing is simply a redistribution of income from taxpayers to bond­holders.

8. ; It seems to me that in many cases the taxpayer and bondholder are the same person.

1. : In all cases, however, the income that leaks from the circular flow in the form of taxes to pay for debt servicing returns as interest payments.

2. : As a result, total income is unchanged. Now I understand why in policy debates, the aggregate size of the national debt is the focal concern. The key policy questions are whether and how to limit or reduce the national debt.

5. Make up your own dialogue using the following expressions:

to reduce the annual federal deficit to limit national debt «

fo eliminate the budget deficit to finance the deficit

to get interest payments to impose a burden on

fo replace old bonds internal debt

external debt debt ceilings