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)Are the "real burden" of the debt.

Question

Quizplus · Accepted Answer

Interest payments on the national debt serve as a redistribution of income from taxpayers to bondholders. When the government borrows money by issuing bonds, individuals and institutions buy those bonds, effectively loaning the government money. In exchange, the government pays back the principal amount borrowed plus interest. The interest payments on the debt represent a transfer of money from taxpayers to bondholders.

Interest Payments on the National Debt