How may the public debt impose a burden upon future generations?
A)By reducing the current level of private capital accumulation.
B)By causing future unemployment.
C)By causing a slowly falling price level.
D)By causing interest rates to be lower than otherwise.

Question

Quizplus · Accepted Answer

When a government has a high level of public debt, it may need to borrow more in the future to finance its expenditures. This can increase the demand for credit and raise interest rates, making it more difficult for businesses and individuals to borrow for investment and consumption. This reduction in private capital accumulation can result in lower economic growth and lower living standards for future generations.

How May the Public Debt Impose a Burden Upon Future