Question

12. What is public debt and what are its implications?

Answer 1

public debt is a loan taken by the government(local ,central and state) .public debt can be from external or internal source .when the loan is burrowed by the government within the country than it is internal public debt and when the loan is burrowed by the government from outside the country(foreign government,foreign nationals ,international organization,) than it is external public debt .

implications

increase in tax -to repay public debt government generally impose some new taxes  

decrease private investment-when public debt is borrowed from internal sources then loan available to private institution is at higher interest rate which discourage private investment .

can lead to economic growth -public debt is generally taken for productive purpose for example for construction of dam so it can be helpful in irrigation and manufacturing of electricity so it can lead development .