National Debt
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National Debt
Theoretical Views on The National Debt
Public debt puts a country on the verge of failed plans and makes it difficult to have a realistic vision. Planning for the future and settling the current financial deficits leaves the government with two options which are either further borrowing or hiking the current prices of taxable commodities. The amount of the public debt solely relies on the two perspectives which are opposing each other and hard to choose the way to follow. However, the population has a significant impact as they are the people contributing the taxes and might decide to stop using taxable commodities (Bonner & Wiggin, 2011).
Long-Run Cots of The National Debt
National debt results in various long-run costs that may affect the economy of the whole country. One example of a significant effect of public debt on long-run expenses is the outsourcing of money from other sectors of the economy. That results in drawing funds from people such as the private investments (Bonner & Wiggin, 2011). The larger population will suffer from a blow as there will be reduced output and capital stock resulting in lower income. Another cost is the reduced government spending on public utilities but hiked taxes which results in a burden on the taxpayers.
Cost of Eliminating the Budget Deficit
Reducing the budget deficit will require the government has to put in place various measures that will come at a cost. The country will have to cut spending on public utilities like healthcare, social security among others so that it may bridge up the gap.
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That will translate to poor facilities to the member’s population and also increased instances of crimes and insecurity. To solve that in the future, the government might have to borrow again which will then add on the cost of eliminating the budget deficit.
Reference
Bonner, W., & Wiggin, A. (2011). Empire of Debt: The rise of an epic financial crisis (Vol. 58). John Wiley & Sons.
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