If interest rates increase, the debt becomes:
A) more expensive.
B) less expensive.
C) smaller as a share of GDP.
D) more stable.

Name: If interest rates increase, the debt becomes: A) more expensive. B) less expensive. C) smaller as a share of GDP. D) more stable.
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Question

Quizplus · Accepted Answer

When interest rates increase, the cost of borrowing money increases, which makes it more expensive for the government to pay off its debt. This is because the government has to pay more interest on the debt it has already accrued.

If Interest Rates Increase, the Debt Becomes