Question

Does public debt impose a burden? Explain.

Answer 1

Yes, public debt imposes a burden in the following cases:

(i) When the government has imposed new taxes or raised the existing tax rates to repay the debt

(ii) When public debt is taken for war purposes or debt is used in an unplanned manner

(iii) When debt is to be redeemed by issuing of new currency it will cause inflation in the country