Question

Leia just read that the national debt owed by the federal government is at an all-time high. (Explain any possible impact on the federal government from unexpected inflation.)

Answer 1

Answer:

If the government of the country where Leia is from has a national debt at an all-time high, and at the same time, unexpected high inflation hits, the situation for the government can become extremely dire.

This is because high inflation will lower the value of the domestic currency, which is probably not the currency in which most of of the debt is owed. The proportion of the national debt that is owed in foreign currency will then become more expensive, because more units of domestic currency will be needed to exchange for the foreign currency, rendering the cost of the national debt a lot higher.