A higher deficit in the current year will lead to increased debt in the future only if
A)the deficit is greater than the previous year's deficit.
B)the deficit-to-GDP ratio is greater than the debt-to-GDP ratio.
C)it causes a drop in private saving.
D)it causes an increase in private saving.
E) none of the above

Question

Quizplus · Accepted Answer

A higher deficit will lead to increased debt in the future regardless of the conditions mentioned in the other options. The deficit itself, if not offset by surpluses or other measures, contributes to the national debt.

A Higher Deficit in the Current Year Will Lead to Increased