similarities and dissimilarities of public debt and private debt
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Answer:
Similarities between public and private debts are: Both the government and individuals take loans to bridge the gap between income and expenditure for their day-to-day activities. They take loans for specific periods at a fixed rate of interest.
Explanation:
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Answer:
Similarities between public debt and private debt are as follows:
1)both the public authority and private individuals borrow funds to acquire certain resources.
2)government may borrow either for consumption or for investment purposes like a private borrower.
3)both public and private borrowing involves diversion of funds from one type of used another.
4) both public authorities and private individuals pay interest on borrowings.
5)both government and individual take loan to fill up the gap between income and expenditure.
Dissimilarities or differences between public debt and private debt:
1)the public debt prevails for a longer period while private person can borrow only for a short period of time.
2)the rate of interest paid by the government is very low as compared to the rate of interest paid by private borrower.
3)government generally borrow money for the welfare of the society.but the private debt is not used for the society, its main aim is profit earning.
4)the public that makes its effect on the production and distribution of wealth and income in the country. But the loan taken by a private person makes no such effects due to being a small amount.
5) the government repay its loan through taxation on the people. Additional taxes are imposed on the public to repay the borrowed amount. On the other hand it is impossible for a private borrower to levy tax.
Explanation: