Future generations will have to pay interest on the current debt because______________?
Correct answer: B. budget deficits are funded with borrowed money
- A. it takes a long time to pay off debts
- B. budget deficits are funded with borrowed money
- C. the U.S government never borrows money from foreign governments
- D. none of the above
Explanation
A budget deficit occurs when government spending exceeds revenue, so the gap is financed through borrowing. The resulting debt carries interest that must be paid by future taxpayers and generations.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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