WAEC Economics 2019 Theory — Question 8

Model answer

(a) Public debt is the total amount of borrowings which the government owes to the general public, domestically or internationally. (b) Reasons why countries borrow (any three): (i) To finance deficit budgeting. (ii) To hasten economic growth and development. (iii) To provide basic amenities needed by the economy. (c) Effects of a huge national debt (any three): (i) Devaluation of the domestic currency. (ii) Too much influence/interference from foreign creditor countries. (iii) High cost of servicing the debt (large share of revenue goes to interest/repayments).