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Questions
What do you mean by public debt?
What is public debt?
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Solution
- Public debt refers to the borrowing done by the government to meet its expenditures when traditional sources of revenue, like taxes, are insufficient.
- Governments borrow from individuals, institutions, and sometimes from foreign sources. In developing or underdeveloped countries, the amount of borrowing is often large due to the need to fund development projects.
- This can lead to a heavy debt burden, and if borrowing becomes excessive, it can result in a debt trap where the country struggles to repay its debts.
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