Which is an important problem associated with the public debt?
A)Payments of interest on the debt lead to greater income equality.
B)Interest payments on the debt tend to improve economic incentives to work and produce more unemployment.
C)Government borrowing to finance the debt may increase the level of private investment.
D)Payment of interest on the debt held by foreigners transfers real resources abroad

Question

Quizplus · Accepted Answer

Payment of interest on the debt held by foreigners transfers real resources abroad, effectively reducing the resources available for domestic consumption and investment. This can have negative consequences for the economy and the country's financial stability.

Which Is an Important Problem Associated with the Public Debt