Question

Burden of external debt affecting production and resource allocation is termed as

Answer 1

Explanation:

External debt is the portion of a country's debt that is borrowed from foreign lenders, including commercial banks, governments, or international financial institutions. These loans, including interest, must usually be paid in the currency in which the loan was made.

Answer 2

Burden of external debt affecting production and resource allocation is termed as Indirect real and money burden.

1. Indirect real burden - There is a rise in indirect taxes for debt repayment. This leads to pressure on workers and adversely affects their willingness to work and save.
2. Indirect money burden - When people are taxed to repay the external debt then, they lose interest in working and consequently in saving and investing. This leads to fall in production.
3. In absence of saving and investment the resource allocation gets affected.