A lot of debate in the US revolves around the impact of risi

A lot of debate in the U.S. revolves around the impact of rising public debt on future. As an economist, discuss the likely impact of the rising public debt in the short run, and the long run? Also, discuss the likely solution(s) to reduce the impact of rising public debt both in the short run and long run. Please cite your sources (academic paper, textbooks, news article, video link etc.) that you use in the discussion post.

Solution

In the short run a rise in public debt enhances economic growth because government can spend more from the debt.The nation\'s AD curve will shift to the right due to increased public debt in the short run.

However,the country repays it\'s debt in the long run.The debt has to repaid by raising taxes, reducing transfer payments or reducing public spending.When government reduces public spending,the AD falls.

The country can be better off in the long run even after settling debt because the government spending has multiplier effects.The rise in income can be way more than the amount of the debt to be repaid.Thus,debt encourages economic growth.

Can\'t provide links.It\'s against chegg\'s policy to provide external links.