Government Debt and its benefits:
- Government debt helps to increase aggregate demand and assist
in dealing with economic recession like situations.
- Government debt can be used by the government to meet the
rising needs for infrastructure or debt can be used for developing
assets and infrastructure.
Economic problem of debt:
- Economic debt can become problem if debt is not used for
productive purposes. it will lead to the rise in debt burden for
future generation. Future generation will become responsible for
paying off debt.
- Debt can generate inflation if economy is already at its full
potential level.