Increases in the fraction of national debt held by foreigners will _____ the burden of debt service on future generations _____.

Question

Quizplus · Accepted Answer

When foreigners hold a larger share of a country's national debt, the interest payments on that debt flow out of the country, creating a higher burden on future generations within the country who will have to pay for that debt through taxes. In other words, the country must use more of its own resources to pay back the debt, which increases the burden on its citizens.

Increases in the Fraction of National Debt Held by Foreigners