Interest payments on the national debt
A)Make it easier for the government to balance the national budget.
B)Are a redistribution of income from taxpayers to bondholders.
C)Have high opportunity costs.
D)Are the "real burden" of the debt.

Question

Quizplus · Accepted Answer

Interest payments on the national debt are essentially payments of interest to bondholders, who are typically wealthy individuals, corporations, or foreign governments. This means that interest payments on the national debt can be seen as a redistribution of income from taxpayers, who must pay higher taxes to fund these interest payments, to bondholders. Therefore, choice B is correct. Choices A, C, and D are incorrect. Interest payments on the national debt do not necessarily make it easier for the government to balance the national budget, as they represent a significant drain on government resources. They also have high opportunity costs, as the resources used to pay interest on the debt could be used for other purposes, such as education, healthcare, or infrastructure. Finally, while the national debt may have other costs and implications, such as reducing access to credit or contributing to inflation, the interest payments themselves are not usually considered the "real burden" of the debt.

Interest Payments on the National Debt