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The national debt may be repaid through:(a) A budget surplus;(b) A budget deficit;(c) Foreign aid;(d) Central Bank purchasing commercial banks.

Question

The national debt may be repaid through:

  1. (a) A budget surplus;
  2. (b) A budget deficit;
  3. (c) Foreign aid;
  4. (d) Central Bank purchasing commercial banks.
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Solution

The national debt can be repaid through:

(a) A budget surplus: This is when the government's tax revenues exceed its expenditures. The surplus can be used to pay down the national debt.

(b) A budget deficit: This is when the government's expenditures exceed its tax revenues. This would not help to repay the national debt, but rather, it would increase it.

(c) Foreign aid: This is money, goods, or services given by one country to another. It is typically not used to repay the national debt, but rather to assist in development or disaster relief.

(d) Central Bank purchasing commercial banks: This is not a typical method for repaying national debt. The central bank may purchase commercial banks to stabilize the banking system, not to repay national debt.

So, the most feasible option to repay the national debt among these would be through a budget surplus.

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