In 2023, the government of a small country, Greenlandia, decided to increase its infrastructure spending to improve roads and schools, leading to an annual budget deficit. If Greenlandia's expenditures are projected to exceed its revenues by $500 million this year, which of the following best explains the potential long-term implications of this budget deficit on the nation's economy?

When a country like Greenlandia spends more money than it earns, it creates a budget deficit. This means they are borrowing money to cover the extra costs, which can lead to higher debt over time. While investing in infrastructure like roads and schools can help the economy grow by improving services and creating jobs, relying on debt can also be risky. For example, if the government has to pay high interest on its loans, it might have less money for important programs in the future. Therefore, while the deficit might help in the short term, it could create challenges for the economy later on if it isn’t managed carefully.