1. Which of the following describe a No-Ponzi scheme condition? (Check all that apply.)

a.A condition that prevents continuous borrowing to pay interest without reimbursing principal

b.An investment scheme created by Ponzi

c.Transversality condition

d.A condition for solvency

e.A requirement that debt cannot grow without bounds

Give an explanation to your answer/answers

2. What is another term for primary balance?

a.Most important balance

b.Overall balance

c.Non-interest balance

d.Operational balance

Give an explanation to your answer/answers

3. The solvency condition is derived from the flow budget constraint by imposing the _____________ condition.

a.Intertemporal budget

b.Solvency

c.Transversality

d.Debt dynamics

4.Place each letter (A, B, C, D) in the correct order to derive the solvency condition.

A. obtain solvency condition

B. impose transversality

C. flow budget constraint

D. intertemporal budget constraint