A large government debt can reduce the amount of ________ in an economy and reduce future income and real wages for citizens.
A) employment
B) capital
C) government spending
D) social benefit programs

Question

Quizplus · Accepted Answer

A large government debt can reduce the amount of capital in an economy. When the government borrows money, it competes with private borrowers for funds, leading to higher interest rates. This can lead to a decrease in investment and a reduction in capital available for private sector growth. This can result in lower productivity, lower economic growth, lower future income, and lower real wages for citizens.

A Large Government Debt Can Reduce the Amount of ________