One of the potential consequences of the public debt is that it may
A) make income distribution more equitable.
B) increase the debt burden of foreign creditors.
C) lead to additional future taxes that reduce economic incentives.
D) decrease interest rates and increase investment spending.

Question

Quizplus · Accepted Answer

When a government runs up a large public debt, there is a risk that it will decide to raise taxes in the future to pay off that debt, which could decrease economic incentives. This is because taxpayers will have less disposable income to spend or invest as they choose, since more of their income will be going to the government. This could have negative impacts on economic growth in the long run.

One of the Potential Consequences of the Public Debt Is