Question

Briefly discuss 2 reasons why growing government debt may NOT be a bad thing.

Answer 1

The public debt is just how much a country owes to outside lenders. These could include individuals , corporations, and even other governments. The term "public debt" is frequently used in interchange with the term "sovereign debt."

Public debt generally refers only to the national debt. Some countries do have federal, regional and municipal debt. Therefore be careful to make sure that the definitions are the same when comparing public debt between countries.

Public debt is a good way in the short term for countries to get extra funds to invest in their economic growth. Public debt provides a secure way for foreigners to invest in the development of a nation by purchasing government bonds.

This is much better than direct foreign investment. That's when foreigners buy at least 10 percent stake in firms, enterprises, or real estate in the country. It's also less risky than investing in public companies in the country through the stock market. Public debt is appealing to creditors at risk, as it is guaranteed by the government itself.

Public debt increases a country's quality of living if applied correctly. This helps government to build new roads and bridges, boost schooling and work training, and provide retirement benefits. This causes people to spend more now, rather than save for retirement. Private citizens' investment further boosts economic development.