Question #49

The rising public debt levels that we are seeing will have to be paid back as the debt matures. These payments and the associated interest servicing will

• reduce the room for other non-inflationary discretionary deficit spending because they will "fill up the spending gap" more quickly.
• reduce the capacity of the private sector to save because they will require cuts backs in the deficit to support the repayments.
• not reduce the room for other non-inflationary discretionary deficit spending because increasing imports will keep opening the spending gap that has to be "filled".

Answer #475

Answer: not reduce the room for other non-inflationary discretionary deficit spending because increasing imports will keep opening the spending gap that has to be "filled".

Explanation

Please read Norway and sectoral balances or post a comment for further discussion.