Which can be inferred from the passage on public debt?

Public debt is often discussed as if it were a household's overdraft, but the comparison is misleading. A household must eventually repay what it borrows, while a state can roll its debt over indefinitely as long as lenders trust it. What matters is the size of the debt relative to the economy and the interest rate the state pays. If the economy grows faster than the interest rate, the debt can shrink as a share of national income even without repayment. Critics reply that the condition cannot be relied on: rates can rise suddenly, and heavy borrowing today may force painful cuts tomorrow. The debate is therefore less about whether debt is good or bad than about how much risk a society is willing to accept.

Answer and explanation

Correct answer: A. A debt can be sustainable even if never repaid in full

  1. Step 1: The passage says a state can roll its debt over indefinitely and that the debt can shrink as a share of income. Step 2. So full repayment is not required. Answer: a debt can be sustainable without full repayment. Why not the others: these contradict the text.

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