ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A debt is the sum of money that is borrowed for a certain period of time and is to be return along with the interest. The amount as well as the approval of the debt depends upon the creditworthiness of the borrower. There are different types of debts that vary with the requirements of the borrower.

Detailed explanation-2: -Credit is money you borrow from a bank or financial institution. The amount you borrow is debt. You will need to pay back your debt, usually with interest and fees on top.

Detailed explanation-3: -The principal–the money that you borrow. The interest–this is like paying rent on the money you borrow.

Detailed explanation-4: -Key Takeaways. Short-term debt, also called current liabilities, is a firm’s financial obligations that are expected to be paid off within a year. Common types of short-term debt include short-term bank loans, accounts payable, wages, lease payments, and income taxes payable.

Detailed explanation-5: -In the US, money is created as a form of debt. Banks create loans for people and businesses, which in turn deposit that money in their bank accounts. Banks can then use those deposits to loan money to other people – the total amount of money in circulation is one measure of the Money Supply.