The opportunity cost of the debt is
A)The interest payments on the debt.
B)Less of an issue if the economy is below full employment since crowding out is less likely to occur.
C)Not an issue if the debt is financed internally.
D)The decrease in public sector output because of government borrowing.

Question

Quizplus · Accepted Answer

When the economy is below full employment, resources are underutilized, so government borrowing is less likely to crowd out private investment, making the opportunity cost of debt less of an issue.

The Opportunity Cost of the Debt Is