Question

Most of the public debt is owed to citizens and domestic institutions. This is one reason that the public debt: 
A. Crowds out private investment
B. Does not impose a burden on future generations
C. Has a procyclical economic effect on the economy
D. Can result in the bankruptcy of the Central government

Answer 1

Answer:

The correct answer is B. Does not impose a burden on future generations.

Explanation:

One aspect that is important for the purposes of economic policy is that of the term of the loan.

- Short-term debt: it is issued with a maturity of less than one year and usually works as a kind of bill of exchange, in this case the State. In Spain, short-term debt is represented by the Treasury Bills. Short-term debt has been used to cover cash needs of the State, the so-called cash deficits that presently state budgets.

- Medium term debt: fulfills the mission of obtaining funds for the financing of ordinary expenses. In Spain they fulfill this role The bonds of the State.

- Long-term debt: its mission is to finance extraordinary expenses and extensive profitability. Within the long term it can have a very varied duration and can even be of unlimited duration, giving rise to perpetual debt. In Spain they are represented by the obligations of the State.