Interest payments on the national debt
A)Make it easier for the government to balance the national budget.
B)Are a redistribution of income from taxpayers to bondholders.
C)Have high opportunity costs.
D)Do not affect the national debt.

Question

Quizplus · Accepted Answer

Interest payments on the national debt are a redistribution of income from taxpayers to bondholders. The government borrows money by issuing bonds, and the interest payments on those bonds are paid out of taxpayer funds. This effectively transfers wealth from taxpayers to the bondholders who hold the debt.

Interest Payments on the National Debt