Do you think we should be worried about the size of the federal debt? Why or...

Do you think we should be worried about the size of the federal debt? Why or why not?

Expert Solution

FEDERAL DEBT

A) Definition-

Federal debt is the total amount of money which the government has taken as a loan/ borrowed and has not paid the debt back.

B) The following are the reasons as to why the size of federal debt should worry us-

If the country is in debt, it will become difficult for it to face any sudden recession or emergency situation thus weakening the economy. The larger the debt, the more difficult it will be for the country to take suitable actions in such situations.
The tax and interest rates increase, thus increasing the burden on the citizens of the country. The higher the debt, the more will be the increase and the more will be the burden.
Investors will not want to invest in an economy which is in debt. If the country has small borrowings, it can pay it back easily. In the case of a huge debt, the investors will not like to take the risk of investing in a debt-ridden economy.
Huge debts make the economy unstable and the defense sector weak.
Huge debts will be passed on to future generation increasing their cost burden.

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Rahul Sunny answered 1 year ago

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