Question

Short-term or long term why is it important to lower the national debt?

Answer 1

The national debt level is one of the most important public policy issues. When debt is used appropriately, it can be used to foster the long-term growth and prosperity of a country. However, the national debt must be evaluated in an appropriate manner, such as comparing the amount of interest expense paid to other governmental expenditures or by comparing debt levels on a per capita basis.

SHORT TERM LOAN :-

For most business owners, a short-term loan will be the way to go. These types of loans can provide you the funds you need fast, sometimes in as few as 24 hours.

And with more alternative lending choices available now than ever before, it’s become that much easier for business owners to skip the restrictive loan requirements of traditional banks and obtain the money they need from elsewhere.

LONG TERM LOAN :-

) Long term loan provides an opportunity to the state to under-take large projects like constructions of canals, hydro-electric projects, buildings, highways, hospitals, etc. As these loans are not to be repaid at a short notice, so the government safely spends them on productive projects.

(ii) Long term loans are also unavoidable for preparing and fighting of a modern war.

(iii) The long term loans provide a very good opportunity for the commercial banks and the insurance companies to invest their surplus funds. As the rate of interest in long term loan is higher than on the short-term loan, therefore, they earn large profits.

(iv) Another merit of the long term loan is that it can be repaid by the government by the time which is favorable or convenient to it. It can also convert these loans at a lower rate of interest later on.

(v) If at any time the rate of interest is low, the government can contract a long-term loan and with the amount thus raised, some public works programs can be undertaken at a lesser cost.