Like any economic crisis, unemployment rises, aggregate income falls, and tax collections drop during the Great Recession. While unemployment rises, safety net spending rises. To stabilize the economy, the government appears to have just two options: harsh austerity (reduce spending) or more borrowing. It is difficult to defend cuts in federal government programs, especially those that provide a minimum standard of living for the poor, but increasing indebtedness hurts the economy. In a few words, analyze the Long-run costs of high national debt.
Like any economic crisis,
National Debt:
national debt refers to the total amount of money that the government owes to external creditors and domestic lenders. It accumulates over time as a result of government borrowing to finance budget deficits or other spending commitments. National debt includes the outstanding bonds, loans, and other forms of debt instruments issued by the government.
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