Question

The indirect costs of government debt involve: Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the option once to place a check mark. For incorrect answer(s), click the option twice to empty the box. check all that apply a distorted credit market. unanswered slow economic growth. unanswered crowding out. unanswered interest paid. Comment.

Answer 1

The indirect costs of government debt include market distortions, slowed economic growth, and investment crowding out, all of which can lead to higher interest rates, reduced capital availability, and economic contractions.

Step-by-step explanation:

The indirect costs of government debt include a distorted credit market, slow economic growth, and crowding out of private investment. These costs arise as government borrowing competes with the private sector for financial resources, potentially leading to higher interest rates and less investment in human and physical capital. Moreover, government debt can create uncertainty in financial markets, possibly resulting in inflationary measures to reduce the debt's real value, thereby diminishing real wealth and damaging confidence in a country's fiscal management.