A Possible Problem with Accumulating a Large Public Debt Is

question 121

True/False

A possible problem with accumulating a large public debt is reduced capital formation because savers buy bonds to finance the deficit rather than place their assets in productive investment projects.

---

Definitions:

Share

A unit of ownership in a corporation or financial asset, giving holders a proportion of the company's profits and voting rights.

Bank Account

A financial account maintained by a bank for a customer, allowing for the deposit and withdrawal of funds and earning of interest.

Annual Withdrawals

The amount of money taken from an account or investment over the course of a year.

Interest

The expense associated with taking out a loan, usually represented as a yearly percent of the total loan value.