Is it true that the amount of debt is always equal to the amount of credit in macroeconomics?

Economics Dec 15, 2020

Expert Solution

No, the amount of debt is not always equal to the amount of credit in macroeconomics as debt is something that you possess and credit is something that you are given.

For example, if we take a loan from the bank as credit for say, two lakh then, and two lakh will be the credit amount. If we are not able to pay back the loan on time and it continues to grow over time and thus after two years of not paying the loan, the bank charges extra ten thousand for delay repayment thus here, two lakh will be considered as credit and two lakh ten thousand will be considered as the debt. Thus the credit and debt are not the same in macroeconomic.

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