Question : A part of national debt known as external debt is the amount_______.
Option 1: borrowed by its citizens from abroad
Option 2: lent by its citizens from abroad
Option 3: borrowed by its government from abroad
Option 4: lent by its government to foreign government
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Correct Answer: borrowed by its government from abroad
Solution : The correct answer is borrowed by its government from abroad .
External debt is a component of national debt due to creditors outside the country. It could be owing to the government, a bank, or another financial organisation. External debt may be used to fund a wide range of government expenses, including infrastructure projects, social programmes, and military spending. It can also be used to fund private investment.
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