When household debt levels rise:
A) the ability to get more credit rises.
B) families are less able to spend in the current period.
C) investment levels rise.
D) tax payments will be higher.

Question

Quizplus · Accepted Answer

When household debt levels rise, families are less able to spend in the current period because they are using more of their income to pay off their debts, leaving less money available for spending. This can have a negative impact on the economy as consumer spending is a major driver of economic growth. The other options are not necessarily true when household debt levels rise.

When Household Debt Levels Rise