If a Government Issues an Excessive Amount of Debt Then

Multiple Choice

If a government issues an excessive amount of debt then

A) it doesn't matter because the national debt need never be paid back.
B) the financial markets will perceive that the risk of the government concerned defaulting on its loans has risen and will demand a higher rate of interest to lend to that government.
C) the financial markets will perceive an increased opportunity for profit and reduce the rate of interest demanded to lend to that government.
D) other governments are likely to do the same.