Public choice analysis indicates that elected political officials will find debt financing
A) unattractive because voters will recognize that excessive debt will lead to the future collapse of the economy.
B) attractive because countries with a higher debt to GDP ratio generally grow more rapidly.
C) unattractive because both politicians and voters will recognize that a larger outstanding debt will mean higher future taxes.
D) attractive because current spending can provide voters with highly visible goods, services, and transfer payments, while borrowing will push the most visible cost of this spending into the future.

Question

Quizplus · Accepted Answer

Public choice analysis suggests that elected officials are incentivized to pursue policies that provide immediate benefits to their constituents, such as visible goods and services, in order to secure votes and reelection. Debt financing allows politicians to provide these benefits without raising taxes in the short term, thus making it an attractive option. The costs of this spending are pushed into the future, which may not be as politically salient. Therefore, option D is the best choice.

Public Choice Analysis Indicates That Elected Political Officials Will Find