The Two Ways in Which Deficit Spending Can Impose a Burden

question 104

Multiple Choice

The two ways in which deficit spending can impose a burden on future generations are

• A) by requiring future generations to face higher taxes and to work with a lower accumulated stock of capital goods.
• B) by requiring future generations to face lower government spending and to utilize a smaller stock of human capital.
• C) by substituting private goods for public goods and thereby shifting resources to foreign residents.
• D) by substituting private goods for public goods and thereby benefiting only large businesses.

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Definitions:

Labor Supply

The total hours that workers wish to work at a given wage rate, or the workforce available for employment.

Payroll Tax

Taxes imposed on employers and employees, calculated as a percentage of the salaries that employers pay their staff, used to fund social security and other government programs.

Corporate Income Tax

A tax imposed on the net income (profit) of corporations, calculated at a corporate tax rate.