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.

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Definitions:

Greenhouse Effect

Warming of Earth’s lower atmosphere and surface as a result of heat trapped by greenhouse gases.

Primary Production

The production of organic compounds from atmospheric or aquatic carbon dioxide, principally through the process of photosynthesis or chemosynthesis.

Photosynthesis

The process by which green plants, algae, and some bacteria convert light energy into chemical energy stored in glucose, using carbon dioxide and water.