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# Funded Debt

## Definition

Debt obligations that are backed by specific funds or revenues set aside for
their repayment, typically involving the assignment of particular taxes or
revenue streams to pay interest and eventually repay the principal.

## Source Chapter

Book V, Chapter 3

## Context

Smith explains funded debt as the second stage of government borrowing, where
specific revenue sources are mortgaged to ensure repayment, contrasting it with
the earlier practice of unfunded debt.

## Economic Domain

Regulation

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