Long-Run Effects of Deficit Spending
Which of the following is a potential long-run consequence of increased government deficit spending on the national debt and economic growth?
A
A higher national debt has no impact on private investment or long-term growth.
B
The increase in national debt directly boosts overall spending and permanently increases real GDP.
C
An expanding national debt eliminates the need for any further fiscal or monetary interventions.
D
A growing national debt may lead to higher interest rates, reducing private investment and slowing economic growth.
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