Causes of National Debt

• The national debt is the total amount owed by the government to its creditors.
• National debt can be caused by wars, natural disasters, economic downturns, or overspending on social programs.
• Governments may borrow money from banks, other governments, or international organizations like the World Bank.
• Borrowing money increases the national debt and requires repayment with interest over time.
• High-interest rates make it more expensive for countries to borrow money, while low-interest rates encourage lending and investment.
• Inflation refers to an increase in prices due to rising demand or decreasing supply.
• Hyperinflation is characterized by extremely high inflation rates that lead to rapid price increases and loss of purchasing power.
• The government uses fiscal policy tools such as taxation and public expenditure to manage the economy.
• Fiscal policy can be used to stimulate economic growth during recessions or depressions.
• Central banks use monetary policy tools such as setting interest rates and adjusting reserve requirements to influence economic activity.