According to the traditional view of government debt,if taxes are cut without cutting government spending,then the long-run effects will be ______ capital and ______ consumption.

Question

Quizplus · Accepted Answer

According to the traditional view, cutting taxes without reducing government spending increases government debt, leading to higher interest rates. This crowds out private investment, resulting in lower capital accumulation and, consequently, lower consumption in the long run.

According to the Traditional View of Government Debt,if Taxes Are