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Author Question: In what ways is the government debt a burden on future generations? What will be an ideal ... (Read 146 times)

jilianpiloj

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on: Jun 30, 2018
In what ways is the government debt a burden on future generations?
 
  What will be an ideal response?

Question 2

In 2013, the reference base period for the CPI for the nation of Webot, a typical consumer spent 30 on potatoes and 150 on steak.
 
  If the price of steak is 15 and the price of potatoes is 1 then there are ________ units of steak and ________ units of potatoes in the CPI market basket.
  A) 10; 30
  B) 150; 30
  C) 5; 30
  D) 30; 150
  E) None of the above answers is correct.
Macroeconomics: Principles, Applications and Tools ¦ O'Sullivan, Sheffrin, Perez ¦ 7th Edition
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maaaaaaaaaa

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Reply #1 on: Jun 30, 2018
Answer to Question 1

There are two different burdens. First, a large debt can reduce the amount of capital in the economy and thereby reduce future incomes and real wages. Second, a large national debt will mean future generations will have to pay higher taxes to finance the interest on the debt.

Answer to Question 2

A


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