Newspaper headlines often argue that the increasing public debt is a burden on future generations. What they mean is that

a. it makes predicting future unemployment levels unpredictable.
b. it causes deflation.
c. it reduces both nominal and real interest rates.
d. it reduces the current level of investment.

To answer this question, we should understand the concept of public debt and its impact on future generations. Public debt refers to the amount of money owed by the government to creditors, which can include individuals, institutions, or other countries.

The argument made in newspaper headlines is that increasing public debt can be a burden on future generations. Let's go through each option to see which one aligns with the argument:

a. It makes predicting future unemployment levels unpredictable. - Unemployment levels are generally influenced by various factors such as economic growth, labor market conditions, and government policies. While public debt can indirectly affect unemployment, it is not directly related to the burden on future generations. So, this option is not the correct answer to the question.

b. It causes deflation. - Deflation refers to a decrease in the general price level of goods and services. Public debt, on its own, does not cause deflation. In fact, during periods of economic downturn, governments may increase their debt through borrowing and spending to stimulate the economy and avoid deflation. Therefore, this option is also not the correct answer.

c. It reduces both nominal and real interest rates. - When the government increases its borrowing and sells bonds to finance its debt, it can lead to an increase in the supply of government securities. This increased supply of bonds can push down bond prices and subsequently increase interest rates. Higher interest rates on government bonds can result in higher borrowing costs for the government, which can have an impact on both nominal and real interest rates in the economy. However, this option does not directly explain how increasing public debt is a burden on future generations. Therefore, it is not the correct answer.

d. It reduces the current level of investment. - This option aligns with the argument made in newspaper headlines. Increasing public debt can lead to higher interest rates, which can crowd out private investment. When the government competes for funds with private investors, it can drive up interest rates, making it more expensive for businesses to borrow and invest. This reduction in the current level of investment can have long-term implications for economic growth and future generations. Therefore, option d is the correct answer.

So, the correct answer is:

d. It reduces the current level of investment.