The conventional view among economists is that persistent budget ________ lead to a lower level of potential GDP in the ________ run.

Question

Quizplus · Accepted Answer

The conventional view among economists is that persistent budget deficits lead to a lower level of potential GDP in the long run. This is because deficits can lead to higher interest rates, which can discourage investment and lead to a crowding out of private investment. Additionally, deficits can lead to an accumulation of public debt, which can reduce confidence in the government's ability to repay its debts and lead to higher borrowing costs in the future.

The Conventional View Among Economists Is That Persistent Budget ________