Th4.5: Factors Influencing the Size of National Debts

Question 1

If the government is continuously running a deficit…

Answer 1

then the national debt will increase overtime

Question 2

There is a consensus view that…

Answer 2

fiscal deficits over 3% will lead to growing national debt as a proportion of GDP

Question 3

It is only when the government runs a budget surplus that…

Answer 3

the size of the national debt increases

Question 4

Ageing populations

Answer 4

ageing populations tend to contribute to a high national debt since the government runs a structural deficit in order to fund their pensions and care and this leads to a high national debt