A public debt which is owed to foreigners can be burdensome because:
A)foreign interest rates are persistently higher than domestic interest rates.
B)payment of interest reduces the volume of goods and services available for domestic uses.
C)payment of interest will conflict with a nation's foreign aid programs.
D)payment of interest will necessarily have a deflationary effect on prices in the paying nation.

Question

Quizplus · Accepted Answer

If a public debt is owed to foreigners, the payment of interest reduces the volume of goods and services available for domestic uses, as the money is leaving the country instead of being spent within it. This can lead to a decrease in domestic investment and consumption, potentially slowing down economic growth.

A Public Debt Which Is Owed to Foreigners Can Be