II. Give English equivalents of the following:

MaKCHManbHMfi po3wip Aec^iu,HTy MaKCMManbHMH po3Mip 6opry no3MHa™ rpouji pe<ЈiHaHcyBaHHH

30BHiujnifi 6opr Ka3HaMeficbKi o6nirauii"

BHyrpiuiHiti 6opr 3MeHUjeHHH 6opry

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III. Fill in the blanks with appropriate words:

internal

borrowing

asset

to eliminate

bonds

external

1. The U.S. Treasury must finance the deficit by ... money.

2. Approximately 86 per cent of U.S. national debt is ... .

3. The national debt represents not only a liabi­lity but an ... .

4. ... debt can eliminate the initial opportunity of debt-financed spending.

5. The only way to limit the national debt is ... the budget deficits.

1. New ... have been issued to replace old ... .

IV. Read and translate the text:

We try to take a closer look at annual budget deficits and the national debt they create. The national debt grew sporadically until World War II, then sky-rocketed. A string of huge deficits in the 1980s increased the national debt to $3 trillion. The U.S. Treasury must finance the deficit by borrowing money. To do so it sells U.S. Treasury bonds.

The first thing to note about the national debt is that it represents not only a liability but an asset as well. Every dollar of national debt represents a dollar of assets to the people who hold U.S. Treasury bonds. Most U.S. bonds are held by government agencies, American households, U.S. banks, in­surance companies and other institutions. They represent internal debt. Approximately 86 per cent of the national debt is internal.

The last major group of bondholders is foreign. All of the bonds held by foreign households and institutions is referred to as external debt. At present, external debt accounts for about 14 per cent of total U.S. debt.

New bonds have been issued to replace old bonds. This refinancing of the debt is a routine feature of the U.S. Treasury's debt management.

The most of America's national debt is internal. External debt, however, poses some special problems and can be a more legitimate worry. External debt can eliminate the initial opportunity of debt-financed spending and impose a real burden on future taxpayers.

The only way to limit or reduce the national debt is to eliminate the budget deficits that create debt. The first step in debt reduction is a balanced annual budget deficit. A balanced budget will at least stop the debt from growing further. A deficit ceiling of zero compels a balanced budget.

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Explicit debt ceilings are another mechanism for curbing the national debt. They are at best a substitute for deficit cei­lings. If a limit is set on the national debt, the only way to stay within that limit is to reduce or eliminate the annual federal deficit.

Deficit and debt ceilings are largely symbolic efforts to force consideration of real trade offs, restrain government spending, and change the mix of output.

V. 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?