Imagine you have a piggy bank, and instead of saving money for later, you take out more than you have, like borrowing from your neighbor to buy candy. That's what countries do when they borrow too much money, and it can cause problems if they don't pay it back.
Examples
- A family takes out a loan for a new car and now has to make monthly payments.
- Your school gets more students, so it asks the town for extra money, like borrowing, to build a new playground.
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See also
- Why Do We Have Different Kinds of Taxes?
- Why Do Prices Change So Much?
- Why Do We Use Money Instead of Bartering?
- Why Do Prices Go Up So Much When There's a Shortage?
- Why Do We Have Different Kinds of Coins?
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Categories: Economics · debt,government finance,economic policy