Eventually,external debt must be repaid with the export of real goods and services.
External financing temporarily eliminates the opportunity cost of financing increased government expenditures.At some point,foreign debt holders will want to collect their bills.To do this,they will cash in (sell)their bonds,and then use the proceeds to buy U.S.goods and services.When this happens,the United States will be exporting goods and services to pay off its debts.

Question

Quizplus · Accepted Answer

This statement is true. Eventually, a country must export real goods and services to repay its external debt. External financing may temporarily ease the burden of increased government spending, but at some point, foreign debt holders will want their money back. They will sell their bonds and use the proceeds to buy goods and services from the country in question, allowing that country to repay its debt.

Eventually,external Debt Must Be Repaid with the Export of Real