Which statement(s) is/are TRUE? I. The crowding-out effect can be mitigated if the funds from deficit spending are used for public investment.
II) The majority of the U.S. national debt is held by the foreign public and is owned by foreign banks, corporations, mutual funds, pension plans, and individuals.
III) It's always wise for a country to pay off its debt.

Question

Quizplus · Accepted Answer

I is true because when government deficit spending is directed towards public investment, it can stimulate economic growth, which may offset the crowding-out effect by not just absorbing private sector savings but also potentially increasing the overall investment in the economy. II is false because the majority of the U.S. national debt is actually held by domestic entities, including the Federal Reserve, individual investors, financial institutions, and government accounts, not primarily by foreign entities. III is false because paying off national debt isn't always wise or feasible; doing so could require significant tax increases or spending cuts, potentially harming the economy. Moreover, some level of debt can be beneficial for economic growth and financial stability.

Which Statement(s) Is/are TRUE? I