Explain the pros and cons of having a large national debt. | Homework.Study.com (2024)

Business Fiscal policy

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Explain the pros and cons of having a large national debt.

National Debt

The government uses various methods such as taxation to raise funds to cover current and recurrent expenditures. Sometimes the total amount needed to pay for government activities is larger than the amount raised, prompting the need to borrow. The government can borrow funds from both internal and external sources. It uses securities such as bills and bonds to borrow from the public.

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Money borrowed to cover a financial budget is a fiscal deficit. The national debt is the accumulation of budgetary deficits over a certain period....

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Government Spending, GDP, and Crowding Out Private Investment

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Chapter 7/ Lesson 6

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The allocation and spending of the national government budget directly impact the economy of a country. Learn about the budget surplus and deficits in the government, the effects of crowding out situations, and see how investing affects the GDP.

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