If Deficit Spending Does Not Contribute to Public Investment and Crowds

question 62

Multiple Choice

If deficit spending does not contribute to public investment and crowds out private investment,then

• A)The rate of economic growth will decline,ceteris paribus.
• B)The current generation will bear the total burden of the debt.
• C)Future productive capacity will be enhanced.
• D)The opportunity cost of the debt will be minimizeD.Government deficits might crowd out private investment.Investment is essential to enlarging our production possibilities and attaining higher living standards in the future.If federal deficits and debt-servicing requirements crowd out private investment,the rate of economic growth will slow,leaving future generations with less productive capacity than they would otherwise have.

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Leon Wieseltier

An American writer, critic, and magazine editor, known for his works on society, culture, and political commentary.

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