Which of the following does not reduce the potential burden of an increase in debt on future generations?
A)the growth rate of output is high
B)in response to increased debt,parents save more to leave their children larger bequests
C)budget deficits raise interest rates
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Budget deficits raise interest rates, which increases the cost of borrowing for future generations. Even if the growth rate of output is high or parents save more for their children, the burden of increased debt can still be significant if interest rates are high. Therefore, option C does not reduce the potential burden of an increase in debt on future generations.

Which of the Following Does Not Reduce the Potential Burden