"In the 1980s the pain which results from a large government deficit was deferred,placed on future taxpayers since foreigners loaned money to the government to pay the debt." Gordon suggests that this "pain" maybe deferred forever if

Question

Quizplus · Accepted Answer

If the government uses the deficit funds to generate economic growth and provide increased future benefits to taxpayers, it can use those funds to pay the interest to foreigners without increasing the burden on future taxpayers. This would ultimately defer the "pain" of the deficit indefinitely. Tighter monetary or fiscal policies could help reduce the deficit, but they would likely still result in some degree of pain for taxpayers. Option A is the best choice because it offers a more sustainable solution.

"In the 1980s the Pain Which Results from a Large