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All questions of Public Debt for Class 10 Exam
What distinguishes internal debt from external debt?- a)Internal debt is always unproductive, whereas external debt is always productive.
- b)Internal debt is repaid within a year, while external debt has no repayment schedule.
- c)Internal debt refers to borrowings within the country, while external debt refers to borrowings from abroad.
- d)Internal debt is borrowed from international agencies, while external debt is from domestic sources.
Correct answer is option 'C'. Can you explain this answer?
What distinguishes internal debt from external debt?
a)
Internal debt is always unproductive, whereas external debt is always productive.
b)
Internal debt is repaid within a year, while external debt has no repayment schedule.
c)
Internal debt refers to borrowings within the country, while external debt refers to borrowings from abroad.
d)
Internal debt is borrowed from international agencies, while external debt is from domestic sources.
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EduRev Class 10 answered |
Internal debt refers to borrowings that a government incurs from sources within its own country, such as local banks and citizens. In contrast, external debt is money borrowed from foreign entities or international organizations. This distinction is important for understanding a country's financial obligations and economic independence.
What distinguishes voluntary debt from compulsory debt?- a)Voluntary debt involves lenders purchasing bonds without obligation, while compulsory debt involves mandatory purchases.
- b)Voluntary debt is only for public projects, while compulsory debt is for private investments.
- c)Voluntary debt is always short-term, while compulsory debt is long-term.
- d)Voluntary debt is incurred only in emergencies, while compulsory debt is regular financing.
Correct answer is option 'A'. Can you explain this answer?
What distinguishes voluntary debt from compulsory debt?
a)
Voluntary debt involves lenders purchasing bonds without obligation, while compulsory debt involves mandatory purchases.
b)
Voluntary debt is only for public projects, while compulsory debt is for private investments.
c)
Voluntary debt is always short-term, while compulsory debt is long-term.
d)
Voluntary debt is incurred only in emergencies, while compulsory debt is regular financing.
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EduRev Class 10 answered |
Voluntary debt occurs when the government raises funds through public debt instruments without compelling buyers to purchase them. In contrast, compulsory debt involves a requirement for certain investors to buy government bonds, resembling a tax obligation. This distinction affects how the government engages with the financial markets.
Which of the following statements is true regarding gross and net debt?- a)Gross debt is always higher than net debt.
- b)Gross debt excludes any funds set aside for repayment.
- c)Net debt is the total debt minus liquid assets.
- d)Net debt includes all liabilities without deductions.
Correct answer is option 'C'. Can you explain this answer?
Which of the following statements is true regarding gross and net debt?
a)
Gross debt is always higher than net debt.
b)
Gross debt excludes any funds set aside for repayment.
c)
Net debt is the total debt minus liquid assets.
d)
Net debt includes all liabilities without deductions.
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Nk Classes answered |
Gross debt is the total amount of a government’s outstanding debts without taking into account any assets that might be used to repay them. Net debt, on the other hand, is calculated by subtracting the value of liquid assets and sinking funds from gross debt. Understanding the difference helps in evaluating a government’s financial health.
What was the trend of internal debt in India from 1990-91 to 2009-10?- a)It remained stable
- b)It decreased significantly
- c)It fluctuated without a clear trend
- d)It increased from Rs 1,54,004 crore to Rs 23,37,682 crore
Correct answer is option 'D'. Can you explain this answer?
What was the trend of internal debt in India from 1990-91 to 2009-10?
a)
It remained stable
b)
It decreased significantly
c)
It fluctuated without a clear trend
d)
It increased from Rs 1,54,004 crore to Rs 23,37,682 crore
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EduRev Class 10 answered |
The internal debt of the central government in India saw a significant increase, growing from Rs 1,54,004 crore in 1990-91 to Rs 23,37,682 crore by 2009-10. This trend indicates escalating borrowing to meet government financial needs, reflecting broader economic challenges and the demand for public services and infrastructure.
Which of the following is a source of public borrowing?- a)Corporate investments
- b)Government bonds and securities
- c)Private loans from banks
- d)Personal savings accounts
Correct answer is option 'B'. Can you explain this answer?
Which of the following is a source of public borrowing?
a)
Corporate investments
b)
Government bonds and securities
c)
Private loans from banks
d)
Personal savings accounts
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Nk Classes answered |
Government bonds and securities are a primary source of public borrowing. These instruments are sold to investors, including individuals and banks, to raise funds. Investors receive interest payments in exchange for their investment, making government bonds a popular and secure investment option.
Which of the following types of debt is often associated with short-term borrowing needs?- a)Irredeemable debt
- b)Productive debt
- c)Funded debt
- d)Unfunded debt
Correct answer is option 'D'. Can you explain this answer?
Which of the following types of debt is often associated with short-term borrowing needs?
a)
Irredeemable debt
b)
Productive debt
c)
Funded debt
d)
Unfunded debt
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Kamna Science Academy answered |
Unfunded debt, or floating debt, refers to short-term borrowing that does not have a specific repayment scheme set out in advance. These debts are typically expected to be settled within a year and are often used to manage cash flow needs of the government.
What is meant by the term "redeemable debt"?- a)Debt without interest payments
- b)Debt that is repaid after a fixed period
- c)Debt that will never be repaid
- d)Debt that the government incurs only during emergencies
Correct answer is option 'B'. Can you explain this answer?
What is meant by the term "redeemable debt"?
a)
Debt without interest payments
b)
Debt that is repaid after a fixed period
c)
Debt that will never be repaid
d)
Debt that the government incurs only during emergencies
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Nk Classes answered |
Redeemable debt refers to loans that the government is obligated to repay after a predetermined period. This type of debt allows investors to receive their principal back along with interest, making it a more predictable financial instrument for both the government and the lenders.
Which of the following best describes the role of public debt in financing development plans?- a)It is a last resort for governments.
- b)It is crucial for ensuring adequate funding for projects.
- c)It has no significant impact on development.
- d)It is solely for emergency situations.
Correct answer is option 'B'. Can you explain this answer?
Which of the following best describes the role of public debt in financing development plans?
a)
It is a last resort for governments.
b)
It is crucial for ensuring adequate funding for projects.
c)
It has no significant impact on development.
d)
It is solely for emergency situations.
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Nk Classes answered |
Public debt plays a vital role in financing development plans by providing necessary funds when government revenues are insufficient. This borrowing facilitates investment in infrastructure and services critical for economic growth and national development, particularly in growing economies.
How does compulsory debt typically function?- a)It is based on voluntary contributions from investors.
- b)It is used strictly for emergency funding.
- c)It is mandatory for certain entities to invest in government bonds.
- d)It is only applicable to foreign investors.
Correct answer is option 'C'. Can you explain this answer?
How does compulsory debt typically function?
a)
It is based on voluntary contributions from investors.
b)
It is used strictly for emergency funding.
c)
It is mandatory for certain entities to invest in government bonds.
d)
It is only applicable to foreign investors.
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Kamna Science Academy answered |
Compulsory debt functions by requiring certain lenders or investors to purchase government bonds as a condition of doing business or under specific legal obligations. This ensures that the government can raise necessary funds but can also impose restrictions on market dynamics.
Which type of debt does not have a specified repayment date?- a)Irredeemable debt
- b)Funded debt
- c)Voluntary debt
- d)Redeemable debt
Correct answer is option 'A'. Can you explain this answer?
Which type of debt does not have a specified repayment date?
a)
Irredeemable debt
b)
Funded debt
c)
Voluntary debt
d)
Redeemable debt
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EduRev Class 10 answered |
Irredeemable debt is characterized by the absence of a fixed repayment date. The government may pay interest regularly, but there’s no obligation to repay the principal at a specific time. This type of borrowing is less common and can lead to long-term financial obligations.
Which of the following best defines funded debt?- a)Debt that is always short-term
- b)Debt that is incurred only during emergencies
- c)Debt that has no specific repayment plan
- d)Debt for which a separate fund is created to meet obligations
Correct answer is option 'D'. Can you explain this answer?
Which of the following best defines funded debt?
a)
Debt that is always short-term
b)
Debt that is incurred only during emergencies
c)
Debt that has no specific repayment plan
d)
Debt for which a separate fund is created to meet obligations
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Kamna Science Academy answered |
Funded debt refers to debt for which the government sets aside a separate fund to meet its repayment obligations. This type of debt is typically considered long-term and allows for more structured financial management, ensuring that the government can meet its financial commitments.
What is the primary risk associated with excessive public debt?- a)High interest rates
- b)The creation of a debt trap
- c)Reduction in government revenue
- d)Increased public spending
Correct answer is option 'B'. Can you explain this answer?
What is the primary risk associated with excessive public debt?
a)
High interest rates
b)
The creation of a debt trap
c)
Reduction in government revenue
d)
Increased public spending
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Kamna Science Academy answered |
The primary risk of excessive public debt is the potential for a debt trap, where a government must borrow more to service existing debt obligations. This can lead to a cycle of increasing debt levels and financial instability, impacting economic growth and leading to higher taxes or reduced public spending.
What is the primary purpose of public debt in the context of developmental projects?- a)To fund private enterprises
- b)To increase tax revenues
- c)To bridge budgetary deficits
- d)To eliminate all forms of taxation
Correct answer is option 'C'. Can you explain this answer?
What is the primary purpose of public debt in the context of developmental projects?
a)
To fund private enterprises
b)
To increase tax revenues
c)
To bridge budgetary deficits
d)
To eliminate all forms of taxation
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Kamna Science Academy answered |
Public debt is often utilized to bridge budgetary deficits when government expenditures exceed tax revenues. By borrowing, the government can finance necessary developmental projects, infrastructure improvements, and public services that may not be fully funded by current tax income.
Why is it important to differentiate between productive and unproductive debt?- a)To assess the potential for future revenue generation
- b)To categorize debts by their interest rates
- c)To determine the government’s total liabilities
- d)To decide which debts to eliminate
Correct answer is option 'A'. Can you explain this answer?
Why is it important to differentiate between productive and unproductive debt?
a)
To assess the potential for future revenue generation
b)
To categorize debts by their interest rates
c)
To determine the government’s total liabilities
d)
To decide which debts to eliminate
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EduRev Class 10 answered |
Differentiating between productive and unproductive debt is essential because productive debts are expected to generate future revenue that can help repay the debt, while unproductive debts do not create any revenue and may increase the financial burden on the government. This assessment guides fiscal policy and investment decisions.
Why might the government of a developing country like India need to borrow for infrastructure projects?- a)To decrease public sector employment
- b)To reduce overall government expenditure
- c)To fund private companies directly
- d)Because these projects may not attract private investment
Correct answer is option 'D'. Can you explain this answer?
Why might the government of a developing country like India need to borrow for infrastructure projects?
a)
To decrease public sector employment
b)
To reduce overall government expenditure
c)
To fund private companies directly
d)
Because these projects may not attract private investment
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EduRev Class 10 answered |
In developing countries, infrastructure projects often require significant investment, which may not be appealing to private companies due to low immediate returns. Therefore, governments borrow to finance these critical projects, ensuring that essential infrastructure is built to support economic growth and development.
What can be a consequence of high levels of public debt on taxation?- a)Decrease in tax rates for citizens
- b)Elimination of all taxes
- c)Necessity for additional taxation to service debt
- d)Increase in public services without additional costs
Correct answer is option 'C'. Can you explain this answer?
What can be a consequence of high levels of public debt on taxation?
a)
Decrease in tax rates for citizens
b)
Elimination of all taxes
c)
Necessity for additional taxation to service debt
d)
Increase in public services without additional costs
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Nk Classes answered |
High levels of public debt may compel governments to raise taxes to meet interest and principal repayment obligations. This can lead to increased financial pressure on citizens and businesses, affecting overall economic activity and public sentiment towards government fiscal policies.
How does public debt impact inflation?- a)It has no effect on the economy.
- b)It can lead to an increase in the money supply.
- c)It decreases the money supply.
- d)It stabilizes prices in the economy.
Correct answer is option 'B'. Can you explain this answer?
How does public debt impact inflation?
a)
It has no effect on the economy.
b)
It can lead to an increase in the money supply.
c)
It decreases the money supply.
d)
It stabilizes prices in the economy.
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EduRev Class 10 answered |
Public debt can lead to an increase in the money supply when the government borrows funds, especially from central banks like the Reserve Bank of India. This can create inflationary pressure as more money circulates in the economy, potentially leading to rising prices if not managed properly.
What type of debt is characterized by loans that generate revenue for the government?- a)Compulsory debt
- b)Unproductive debt
- c)Irredeemable debt
- d)Productive debt
Correct answer is option 'D'. Can you explain this answer?
What type of debt is characterized by loans that generate revenue for the government?
a)
Compulsory debt
b)
Unproductive debt
c)
Irredeemable debt
d)
Productive debt
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Nk Classes answered |
Productive debt is associated with loans taken for projects that have the potential to generate revenue, such as infrastructure initiatives. These loans are considered self-liquidating because the revenue generated from the projects helps pay back the principal and interest. This form of debt is beneficial for economic growth.
What is the impact of external debt on a country's economy?- a)It can lead to an outflow of economic resources.
- b)It creates more domestic jobs.
- c)It always leads to increased foreign investment.
- d)It reduces the need for domestic borrowing.
Correct answer is option 'A'. Can you explain this answer?
What is the impact of external debt on a country's economy?
a)
It can lead to an outflow of economic resources.
b)
It creates more domestic jobs.
c)
It always leads to increased foreign investment.
d)
It reduces the need for domestic borrowing.
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EduRev Class 10 answered |
External debt can result in an outflow of economic resources, as countries must make interest payments to foreign lenders. This can strain the domestic economy, particularly if large sums are required to service the debt, potentially diverting funds away from local investments and services.
What is primarily meant by public debt?- a)Government's planned spending exceeding its total revenue
- b)Loans taken by private individuals
- c)Government's total assets
- d)The total income generated by the government
Correct answer is option 'A'. Can you explain this answer?
What is primarily meant by public debt?
a)
Government's planned spending exceeding its total revenue
b)
Loans taken by private individuals
c)
Government's total assets
d)
The total income generated by the government
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Kamna Science Academy answered |
Public debt refers to the situation where a government's planned expenditures surpass its total revenues, necessitating borrowing to cover the deficit. This borrowing can come from various sources, including individuals, banks, and international agencies. Understanding public debt is crucial as it reflects a government's financial health and its ability to manage fiscal responsibilities.
Chapter doubts & questions for Public Debt - Economics Class 10 ICSE 2025 is part of Class 10 exam preparation. The chapters have been prepared according to the Class 10 exam syllabus. The Chapter doubts & questions, notes, tests & MCQs are made for Class 10 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests here.
Chapter doubts & questions of Public Debt - Economics Class 10 ICSE in English & Hindi are available as part of Class 10 exam.
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Economics Class 10 ICSE
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