During an especially difficult year of weakening financial conditions, the government of Geriva, a European nation, borrows money to meet its legal obligations. However, once the borrowed amount reaches a certain limit, the government is not allowed to borrow more money. This is because the government has hit the _____.
A)fiscal cliff
B)reserve requirement
C)debt ceiling
D)price ceiling

Question

Quizplus · Accepted Answer

The situation described in the scenario matches the definition of a debt ceiling, which is a limit on the amount of money that a government can borrow. Once the debt reaches the ceiling, the government is not allowed to borrow any more money. The other options, such as the fiscal cliff, reserve requirement, and price ceiling, do not accurately describe the scenario.

During an Especially Difficult Year of Weakening Financial Conditions, the Government