Inflation can
reduce debt
Rising prices
reduce the value
of money,
lightening the
weight of debt
repayment.
❯❯Public/national/sovereign debt
Tot al debt owed by a government.
❯❯Internal debts Money that
is borrowed from within a
government’s own country.
❯❯External debts Money that
is borrowed from abroad.
NEED TO KNOW
DEBT DEBT
GOVERNMENT DEBTS RISE IN WARTIME
War imposes exceptional demands on government spending. Governments
typically finance this by borrowing money. The first ever government debts
were a direct result of borrowing to fund military campaigns.
INFLATION INFLATION
Weak
economy
A struggling
economy is
liable to
default.
DEBT
DEBT
DEBT
DEBT
GOVERNMENT
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GOVERNMENT FINANCE AND PUBLIC MONEY
Managing state finance
US_110-111_Public_Debt.indd 111 13/10/2016 16:18