Question

what is national debt and why is it a problem. write a paragroph

Answer 1

National debt is the amount of money which the government has borrowed. It is measured at a point of time. Actually it is the net accumulation of government’s annual budget deficit. It can be classified as short, medium and long term debt based on the repayment of the debt. Short term is considered which is one year or less long term is which lasts ten years or more; and the medium term is in between. It is also classifies as external and internal debt- external debt means when the lenders are from foreign and in case of internal the lenders are belongs from the country.

Government spends more than its income, which received from tax and other resources. In short run it provides extra fund to a government which the government can use it for economic growth but if the national debt continues to rise it can make the economy unstable and which can lead to price fluctuation, trade imbalance, currency depreciation, ill-effect on economic growth, unemployment etc.