Question

Distinguish between Internal debt and External debt.

Hint:

Internal debt is owed to domestic creditors, whereas external debt is owed to foreign creditors and is subject to currency exchange risk.

Answer 1

Internal Debt is the debt incurred by the government from its own citizens, institutions, or banks within the country. It is usually in the form of government bonds or treasury bills.
External Debt refers to the debt borrowed by the government from foreign countries or international financial institutions. This debt is usually in foreign currency and may involve international loans or bonds. Final Answer: \[ \boxed{Internal \; Debt \; is \; borrowed \; within \; the \; country, \; while \; External \; Debt \; is \; borrowed \; from \; foreign \; sources.} \]