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JAMB Economics 2006 Question 6

Question 6

Public Finance

When the federal government guarantees a loan for a state government, such a loan constitutes

  1. A.a public debt
  2. B.a transferred debt
  3. C.a private debt
  4. D.an inter-governmental debt
Show the answer and explanation

Answer: A (a public debt)

Explanation

A loan taken by a state government and guaranteed by the federal government is owed by the public sector, so it is a public debt.