Private businesses can borrow money at a lower interest rate than state and local governments can.

Question

Quizplus · Accepted Answer

State and local governments are typically able to borrow money at lower interest rates than private businesses because they are seen as less risky borrowers. This is due in part to the fact that governments have the power to tax their residents and businesses, which provides a source of revenue to repay their debts.

Private Businesses Can Borrow Money at a Lower Interest Rate