Multiple choice

Assertion (A) : James Buchanan viewed that primary burden of public debt is shifted to posterity. Reason (R) Public debt is paid by taxing the posterity.

  1. (A) is true, but (R) is false

  2. (A) is false, but (R) is true

  3. Both (A) and (R) are false

  4. Both (A) and (R) are true and (R) is the correct explanation of (A).
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

James Buchanan argued that the primary burden of public debt is NOT shifted to future generations if debt finances current consumption rather than public investment. The 'burden' falls on current taxpayers who feel the impact of reduced private consumption as government borrowing crowds out private investment. The Reason statement is also false - debt can be serviced through various means beyond taxing future generations.

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