Question

QUESTION 8 Those who do not believe that the federal govermment should make it a priority to balance its budget argue that O a it is possible for the government debt to rise forever o b. the adverse effects of government debt on future generations can be offset by forward-looking parents @ с. concern about the budget deficit is dangerous because it draws attention away f om other government policies that redistribute income across generations o d All of the above are correct

Answer 1

A federal government, especially of a developing nation, cannot afford to be concerned only about the budget deficit. They need a good amount of funds for various developmental works, investing in social policies, and developing infrastructure and this cannot be met by national savings alone. Therefore borrowing plays an important role in the development activities. Budget deficit is also a significant amount in developed nations as well. Examples of developing nations are India and China, and those of developed nations are the USA and the UK.

Therefore, the right option is c. concern about the budget deficit is dangerous because it draws attention away from other government policies that redistribute income among generations.