Question

how might the United States national debt impact the global economy?

Answer 1

US debt has increased significantly over the past few years. it has crossed the mark of $ 22 trillion or it is above the 108 % of US GDP.

US debt affects the global economy positively and negatively. Over the short run, there is rise in expenditure, output and demand in economy when debt rises. it affects the global economy positively. Growth rate is quite high during this phase.

But such positive effects are not long lasting, gradually government is inclined to reduce the debt under the pressure of debt servicing and possible adverse impact on business and investment sentiments. Rise in government debt also reduces the investment when interest rates are high.