Total indebtedness of a government, especially as evidenced by securities issued to investors. The national debt grows whenever the government operates a budget deficit—that is, when government spending exceeds government revenues in a year. To finance its debt, the government can issue securities such as bonds or treasury bills. The level of national debt varies from country to country, from less than 10percnt of the gross domestic product (GDP) to more than double it. Public borrowing is thought to have an inflationary effect on the economy and thus is often used during recessions to stimulate consumption, investment, and employment. Seealso deficit financing; John Maynard Keynes.

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