If deficit spending does not contribute to public investment and crowds out private investment,then
A)The rate of economic growth will decline,ceteris paribus.
B)The current generation will bear the total burden of the debt.
C)Future productive capacity will be enhanced.
D)The opportunity cost of the debt will be minimizeD.Government deficits might crowd out private investment.Investment is essential to enlarging our production possibilities and attaining higher living standards in the future.If federal deficits and debt-servicing requirements crowd out private investment,the rate of economic growth will slow,leaving future generations with less productive capacity than they would otherwise have.

Question

Quizplus · Accepted Answer

Deficit spending that crowds out private investment can reduce the rate of economic growth, as private investment is essential to increasing productive capacity and achieving higher living standards in the future. A slower rate of economic growth can have negative effects on income and employment opportunities, as well as overall economic well-being.

If Deficit Spending Does Not Contribute to Public Investment and Crowds