What are the effects of running a high budget deficit,as the US does?

Question

Quizplus · Accepted Answer

Running a high budget deficit can lead to higher interest rates, as investors demand higher returns to compensate for the increased risk associated with lending to a country with high levels of debt. This can also lead to an overvaluation of the country's currency, as foreign investors seek to buy the currency in order to invest in the country, resulting in a stronger exchange rate. Both of these effects are present in the United States, where budget deficits have been high for many years. Additionally, large capital outflows can occur as investors seek higher returns in other countries, which can further exacerbate the effects of a high budget deficit.

What Are the Effects of Running a High Budget Deficit,as