One of the potential problems with the public debt is that it may:
A. make income distribution more equitable.
B. lead to added taxes that reduce economic incentives.
C. decrease interest rates and increase investment spending.
D. increase the debt burden of foreign creditors.
Answer: B
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If the Fed is concerned about a possible recession, it ________ the federal funds rate, which ________ the quantity of money and ________ the amount of bank loans
A) raises; decreases; decreases B) lowers; decreases; decreases C) lowers; increases; decreases D) raises; increases; increases E) lowers; increases; increases
The expectations effect is the
A) increase in the interest rate brought on by an expected increase in Real GDP. B) increase in the interest rate due to a higher expected inflation rate. C) decrease in the interest rate due to an expected increase in the supply of loanable funds. D) idea that people form their expectations of inflation by considering all available information about past, present, and future inflation. E) idea that people form their expectations of inflation by considering only information about past inflation experience.