Question

A public debt which is owed to foreigners can be burdensome because: a foreign interest rates are persistently higher than domestic interest rates b payment of interest reduces the volume of goods and services available for domestic uses c payment of interest will conflict with a nation's foreign aid programs d payment of interest will necessarily have a deflationary effect on prices in the paying nation e payment of interest will necessarily have an inflationary effect on prices in the paying nation

Answer 1

A public debt owed to foreigners can be burdensome because B) payment of interest reduces the volume of goods. This can usually be seen illustrated in the form of a nation lending another nation money. The debt is public because the whole nation takes it on. The lending nation then is lacking in terms of use by the lending nation.