Impact Of National Debt And The Economic Growth Of A Country

This report will evaluate the impact of national debt and the economic growth of a country. The UK economy will be used as the benchmark to evaluate the dynamics and the major player affecting the national debt. As it is known the national debt is influenced by the aggregate demand which is the sum of consumer spending, firm’s investment, government spending and net export of a nation and four macroeconomic objectives which are the positive economic growth, full employment, low stable inflation and an equilibrium in the balance of payment (export- import= 0) The notion of debt has several connotations. First of all, it is important to distinguish what government’s budget deficit and country’s debt mean. A country has to draw up the annual budget, which represent the difference between what is spending (such as in welfare and infrastructure) and what is earning (for instance tax revenue). A nation that spends more than it receives will have a budget deficit. In addition, to balance this deficit the country has to borrow some money. Thus, the HM Treasury has to issue treasury bonds, bills and notes in which the country is borrowing from the different investor as National Bank, domestic and foreign private investors, other countries etc. These bonds differ for the length of the payback (such as Treasury notes have to be paid in less than one year) and based on the bond duration they have different interest rates which are usually going to be higher whether the bond issued has aShow MoreRelatedUnited States National Debt1438 W ords   |  6 PagesUnited States’ National Debt The current economic event on the increase in the National government debt has become of interest to the public and the decision makers. This paper looks at the economic event as per Stephen Dinan’s article in The Washington Times dated on June 16, 2015, in regards to the impact of the increasing national debt to the general economic growth in America. 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