Public Debt — Economics STD 10 — Question

(i) (a)Public loans raised within the country are called internal debt whereas loans from other countries are referred to as external debt.
(b) An internal debt may be voluntary or compulsory whereas external debt is generally voluntary.
(ii) Loans taken by the government for developmental work is called productive debt. For example, loans used for construction of irrigation projects.
When the government borrows for non-developmental works (such as war finance) it is called unproductive loan.