Question #31

Among the Australian Government debts are Benchmark Treasury Fixed Coupon Bonds on issue. There are about $A61 billion outstanding and maturing at various dates. Around $A6 billion of them mature in September 2009 and the coupon value (interest rate) is 7.5 per cent. So although the government is not financially constrained

• it remains true that the debt has to be paid back and so the government will have to choose which projects have to be sacrificed to service the debt.
• it remains true that the debt has to be paid back but this does not require any trade-off between debt servicing and other public projects.
• it is not true that the debt has to be paid back because the government can spend whenever it likes.

Answer #291

Answer: it remains true that the debt has to be paid back but this does not require any trade-off between debt servicing and other public projects.

Explanation

Please read Lucky he's not Treasurer anymore or post a comment for further discussion