Economics Real Vs Nominal Gdp Questions
Government debt can have a negative impact on real GDP per capita. When a government has a high level of debt, it often needs to allocate a significant portion of its budget towards debt servicing, such as interest payments. This reduces the amount of funds available for productive investments, such as infrastructure development or education, which can contribute to economic growth and increase real GDP per capita. Additionally, high levels of government debt can lead to higher interest rates, which can discourage private investment and consumption, further hindering economic growth.