Question : Public debt refers to:
Option 1: Debt owed to the government
Option 2: Debt owed by the government
Option 3: Debt owed by public companies
Option 4: Debt owed by private individuals
Correct Answer:
Debt owed by the government
Solution : The correct answer is (b) Debt owed by the government
Public debt refers to the debt that is owed by the government of a country. It represents the accumulated borrowings of a government to finance its expenditures when its revenues are insufficient. Governments borrow money by issuing bonds, treasury bills, or other securities to raise funds from investors or financial institutions. Public debt can arise from various sources, including budget deficits, infrastructure development projects, social programs, and economic stimulus measures. The government's debt obligations are typically backed by the full faith and credit of the issuing country.
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