Economics · Fiscal Policy
Why does an excessive reliance on market borrowing to finance a high fiscal deficit create a long-term burden on future generations?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It creates a high future debt-servicing liability that requires higher taxation or reduced public spending✓
- 2It automatically depreciates the domestic currency to zero value instantly
- 3It prevents future generations from participating in global equity markets entirely
- 4It forces the central bank to freeze all private personal savings accounts indefinitely
Correct answer
It creates a high future debt-servicing liability that requires higher taxation or reduced public spending
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