If the public debt is a debt t
If the public debt is a debt that we owe to ourselves, thenthere are obviously no problems connected with such a debt.Critically evaluate. What are some of the real and potentialproblems with a large public debt?
Answer:
Public debt is amount of debt a country owes to outside lenders.It is also called sovereign debt . The government issues bonds andthe outsiders invest in it for long period of time or short periodof time. These are considered highly secured form of debt .
To say that public debt is the debt we owe to ourself is wrongbecause public debt is the amount of debt that a country owes tothe outside lenders . Funds through these types of debt aregenerated by government to fuel the growth of its economy with thehelp of credit.
Public debt is the accumulation of annual budget deficits. Whenthe public debt start to grow higher, it is a matter of the concernfor long-term growth and sustainability of an economy because debtsare often associated with redemption so if more debt will be theremore redemptions will also be there. That will slow down the growthof the country posing solvency risk and defaulting on its debt forlonger periods.
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