What is the principal purpose of public debt management?
Correct answer: B. To finance public needs at acceptable risk and cost
- A. To eliminate every form of government expenditure
- B. To finance public needs at acceptable risk and cost
- C. To prevent all changes in market interest rates
- D. To replace taxation permanently with borrowing
Explanation
Debt management seeks to meet the government's financing requirements while controlling borrowing costs and risks such as refinancing or exchange-rate risk. It does not imply that borrowing can permanently replace taxation or that interest rates will never change.
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About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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