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Distinguish Between Voluntary Debt and Compulsory Debt - Economics

Distinguish between Voluntary debt and compulsory debt

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Solution

Voluntary and compulsory debt: When the government raises public debt without putting any compulsion on the buyers of government bonds, it is called voluntary debt. The chief advantage of a voluntary debt, as compared to a tax is that different lenders are free, and according to their inclinations can subscribe as much as possible. Most of the public debts are voluntary in nature. On the other hand, if the lenders purchase governments bonds under compulsion, it is called compulsory
debt. In this case, the loan must be compulsorily subscribed on the same basis as a tax.

Concept: Concept for Public Debt
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