If deficit spending does not contribute to public investment and crowds out private investment,then
A)The rate of economic growth will decline,ceteris paribus.
B)The current generation will bear the total burden of the debt.
C)Future productive capacity will be enhanced.
D)The opportunity cost of the debt will be minimized.

Question

Quizplus · Accepted Answer

If deficit spending crowds out private investment, then there will be less investment in the economy overall, leading to a decline in economic growth. This is because private investment is vital for driving innovation, productivity, and job creation, while government spending is often less efficient and productive. Therefore, deficit spending can harm the economy by reducing private investment and economic growth.

If Deficit Spending Does Not Contribute to Public Investment and Crowds