comparing and contrasting your experiences and opinions. Share current news articles or references from the textbook that support your decisions in the simulation and your claims related to the national debt.

During the simulation the strategies I used to lower the debt were raising tax levels, cutting down on defense spending as well as imposing policies within social security and health care. A high national debt can pose a risk to long-term sustainability and economic stability. When there is a higher national debt it can lead to higher interest rates on loans for expanding business as well as reduce the number of investors as it shows the government cannot manage its finances. According to The American Leader, the target most commonly referenced is a 60% debt-to GDP ratio. In 2020 the debt- to GDP ratio reached an all-time high at 129%. This rising debt reflects the imbalance between tax and spending policies. The crowding-out effect occurs when government spending leads to higher interest rates, which in turn reduces private investments and consumption. Mankiw (2021) stated "The increase in the interest rate, in turn, reduces the quantity of goods and services demanded. In particular, because borrowing is more expensive, the demand for residential and business investment goods declines. In other words, as the increase in government purchases increases the demand for goods and services, it may also crowd out investment" (34-2e). The higher interest rates have a negative effect because borrowing becomes more expensive for businesses and individuals and these businesses may lead to cut backs on investment projects as well as a reduction in consumer spending particularly on larger purchases such as houses and cars. The crowding-out effect on private investments can have serve effects on the long-term growth and efficiency of the economy. Policymakers must consider the potential impacts when creating fiscal policies to try and keep a balance between growth and fiscal sustainability.