Incurring an Internal Debt to Finance a War Does Not

question 48

Multiple Choice

Incurring an internal debt to finance a war does not pass the cost of the war on to future generations because:

• A)the opportunity cost of wartime expenditures was borne by the generation that lived during the war.
• B)the Federal government can shift expenditures from military goods to the production of other public goods.
• C)the Federal government has the power to levy taxes to pay its debts.
• D)wartime inflation reduces the relative size of the public debt.