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Question
Some economists believe that financing deficit spending by increasing taxes will lead to a lower level of national consumption and a higher level of national savings than deficit spending. The reason is
A) people believe that they can consume the government provided goods and have future generations pay the bill.
B) that people do not realize that taxes have increased also.
C) people will forgo private consumption now as society substitutes government goods for private goods.
D) the interest rate on the debt will increase.
Answer
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