(Problem 7) Which of the following U.S. policies and institutions may negatively

Question

(Problem 7) Which of the following U.S. policies and institutions may negatively influence U.S. long-run economic growth? O The government has directly supported economic growth through its support of public education as well as research and development O The country has been politically stable, and its laws and institutions protect private property. O The economy has attracted significant savings, both domestic and foreign, that have allowed investment spending to spur the growth of the capital stock and fund research and development O The government's persistently large borrowing may make financing additional improvements in infrastructure and education (a phenomenon known as "crowding out") difficult, consequently slowing economic growth

Explanation / Answer

The government's large borrowings may have a negative effect on the economy.Borrowings are to be repaid in the long run and if the country does not sufficient financial resources,it won't be able to repay the borrowed amount.The government will have to reduce its spending and increase the tax rate which results in the loss and aggregate demand and output.

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