Can you list all the possible ways a country can accumulate debt?
You should split your question in two. The only way a country can accumulate debt is by issuing bonds, period. This can be at a sovereign/federal level or at local, municipal or provincial level. The bonds can be denominated either in the home currency or are sometimes issued in a worldwide reserve currency such as the US$ or Euro. Those bonds may then be purchased by a number of different parties which will have different effects on the money supply. Potential buyers: Domestic/external central bank Domestic/external banks or financial institutions (e.g. pension funds) Domestic/external private buyers Domestic/external companies In accounting terms the country gains an asset which is an increase in cash and a liability of the future payments on the bonds. Good luck on that exam Thomas S – you will need it.
