When household debt levels rise
A) the ability to earn more credit rises.
B) families are less able to spend in the current period.
C) investment levels rise.
D) tax payments are higher.

Question

Quizplus · Accepted Answer

When household debt levels rise, families become less able to spend in the current period as their disposable income is reduced due to debt service payments. This can have negative effects on the overall economy as consumer spending is a major driver of economic growth. A rise in household debt levels does not necessarily lead to an increase in the ability to earn more credit, investment levels, or tax payments.

When Household Debt Levels Rise