In a Democratic Setting, Debt Financing Is Attractive to Elected

question 145

Multiple Choice

In a democratic setting, debt financing is attractive to elected political officials because

• A) it makes it possible for them to spend on current projects favored by their constituents without having to levy current taxes.
• B) it drives up interest rates, which encourages saving.
• C) it leads to higher taxes in the future, which will tend to slow economic growth.
• D) it makes the cost of government more visible, which will help voters allocate government spending more efficiently.