Which of the Following Makes It More Likely That a Country

Multiple Choice

Which of the following makes it more likely that a country will get caught in a vicious circle of debt financing, higher taxes, and sluggish growth?

A) Politicians like to raise taxes, but they are reluctant to spend on education, health care, and roads.
B) High levels of debt will eventually lead to higher taxes just  to pay the interest on the debt, but high taxes will slow economic growth.
C) As outstanding debt increases, politicians will be reluctant to run budget deficits, which will cause the economy to slow.
D) As outstanding debt increases, short-sighted politicians will want to run large budget surpluses in order to pay off the national debt quickly.