An increase in the public debt will:
A)increase incentives to work and bear risk.
B)probably increase the inequality in the distribution of income.
C)decrease the Canadian debt held by citizens and institutions in foreign nations.
D)decrease the potential for higher taxation in Canada

Question

Quizplus · Accepted Answer

An increase in public debt usually means that the government is borrowing more money, which could lead to higher interest rates and taxes. This may result in an increase in income inequality as those with lower incomes will have to bear a bigger burden of the debt through higher taxes or reduced government services. Therefore, option B is the correct choice. Option A is incorrect because an increase in public debt does not necessarily increase incentives to work and bear risk. Option C is incorrect due to the fact that an increase in public debt does not have any direct effect on the Canadian debt held by citizens and institutions in foreign nations. Option D is incorrect as an increase in public debt could lead to higher taxation.

An Increase in the Public Debt Will