One of the Main Problems with a Large National Debt

question 51

Multiple Choice

One of the main problems with a large national debt is the fact that:

• A) it may cause the government to go bankrupt.
• B) large sums of money must be raised to ultimately repay the debt.
• C) the debt may drive up interest rates and slow the rate of capital formation.
• D) the repayment of interest causes a burden in that there will be fewer goods and services available.

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Definitions:

Business Cycles

Fluctuations in economic activity characterized by periods of expansion (growth) and contraction (recession) in an economy.

Upward Trend

A pattern or movement in data points that shows an increase over a period of time, often used in economic, financial, and market analyses.

Classical Analysis

An economic theory that focuses on free markets, growth, and the economy's self-regulating nature, emphasizing the importance of limited government intervention.

Growth

The increase in the economic output of a country or region, typically measured by the rise in the Gross Domestic Product (GDP), over time.