Question

connect 8. 000 points is government debt good or bad for the economy and the nation as a whole Government debt: Instructions: You may select more than one answer Cock the box with a check mark for correct answers and click to empty the box for the wrong answers can cause crowding out which no t es is not a problem since we were selves must be repaid, causing government est payments pushes the burden of the debtonto reg i on gives the government the flexibility to respond to economic conditions by could be repaid with a few years of fiscal austerity is smaller than was twenty years ago References eBook & Resources Check All That Apply Lang government de 2-0 d he bones and costs of section is Government Deth Good or Bad?

Answer 1

Governmet Debt :

1) Can cause crowding out which increases interest rates

This is can be checked graphically on IS-LM model, by shifting IS curve to the right(as govt increases spending) . This move increases interest rates

2) Must be repaid , causing government interest payments

As you have to pay debt, increasing debt will only increase yearly accumulated interest on such which adds to debt burden

3) Pushes the burden of debt onto future generations

as debt is to be repaid in the future , it is the future generation which have to bear higher taxes or other measures through which govt will pay back debt

4)government debt gives government flexibility to respond to economic conditions by changing its spending

In bad times , government can borrow to increase its spending to tackle the economic downturn and in good times it can cut back on spending and pay back the debt

Rest of the options dont apply
We can owe debt to others as well not just us

A few years of austerity will not be enough to pay back all the accumulated debt

Governement debt has risen over the last 20 years massively