Discuss

1.

One important impact that national debt has on the economy of the United States is its effect on private investment. When there are increasing budget deficits over a long period of time, the government has to continuously borrow more money, leading to accumulated national debt. As national debt increases, crowding out will occur. Crowding out is where federal borrowing causes the interest rates to increase and business investments to decrease. In general, government borrowing causes the available financial capital to reduce. So, businesses are actually unable to invest a lot into physical capital. Also, the higher interest rates can dissuade businesses from investing, especially on physical capital such as machinery and equipment. In all, more national debt means that businesses must and will invest less in physical capital which will, in turn, slow economic production and innovation in the long run.

2.

America's national debt keeps piling up and not many people know about it, but it is very important. The national debt is how much money the government borrows to give local and state govts, business,corporations, ect. But that money would have to be paid back,if not the country would have many problems to deal with one being the ability to help not be able to have funds during an emergency. "Government often borrow to address unexpected events, like war, financial crisis and natural disasters." Due to a large national debt there are ways to go about trying to solve the problem as in "spending cuts", or "raising taxes" doing those two things and be a problem for most people seeing that many people work really hard but don't get paid as much and spending cuts would take away from having resources for underprivileged communities. In case of something happening as in a natural disaster people won't be taken care of because there is not enough money to help them get back on their feet also for war there wouldn't be enough equipment to protect the troops.