The larger the amount of outstanding public debt:
A)the lower the tax revenue the government must collect.
B)the more spending the government can afford.
C)the smaller the crowding out of private investment spending.
D)the larger the fraction of the federal budget deficit that must be devoted to interest payments.

Question

Quizplus · Accepted Answer

As the outstanding public debt increases, the interest payments on the debt also increase. This means that a larger portion of the federal budget deficit must be devoted to paying off the interest, which can limit the resources available for other government spending priorities. Therefore, choice D is the best answer.

The Larger the Amount of Outstanding Public Debt