Question

Which of the following statements about National Debt is TRUE?

Options

• National debt is the total amount of money borrowed by a country’s government that must be repaid.

• National debt includes the money borrowed by industrialists of a country.

• National debt has no impact on the country’s economy.

• National debt is always considered a negative factor for a country’s development.

Answer 1

National debt is the total amount of money borrowed by a country’s government that must be repaid.

Explanation:

National debt is the total amount owed by a country’s government to domestic and foreign creditors, i.e., government borrowing that must be repaid. It does not include debts of private industrialists (those are private sector liabilities) and whether national debt is “good” or “bad” depends on its size, how the funds are used, and the country’s ability to service it.