If the debt is financed externally,then the burden is incurred when the debt is financed.
The debt held by foreign households and institutions is known as the external debt.At the time the debt is sold externally,there are no opportunity costs.Instead of having to move along the production possibilities curve,external borrowing allows us to consume beyond the production possibilities curve.

Question

Quizplus · Accepted Answer

The statement "Instead of having to move along the production possibilities curve, external borrowing allows us to consume beyond the production possibilities curve" is false. External borrowing does not actually increase the production possibilities of a country, and there are still opportunity costs involved in using external funds to finance debt.

If the Debt Is Financed Externally,then the Burden Is Incurred