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How did foreign debt arise?
Evaluation: Borrowing shows an injection of new resources in the domestic economy and also an opportunity for development.
• When borrowed resources are used to raise productive capacity, in that case the loan and interest repayments can be met through economic growth.
• When the loan is used to finance current account deficits in that case there is no net investment as well as future economic growth. Debt is a burden.
The average amount of debt families have is 2.5 times their annual income with a standard deviation 0.75 times their annual income. How much debt does a family have to have (relati
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