ABSTRACT
Debt is created when a government, firm, or individual borrows money from another government, firm, or individual. The borrower gains immediate buying power in exchange for a promise of repayment, while the lender delays buying power in exchange for periodic or lump sum of interest payments in addition to the promised principal repayment. Depending on negotiated terms, the borrower repays the principal to the lender in scheduled periodic payments or in a lump sum on the due date, called the maturity.
