Principles of Macroeconomics / Unit 7 MAC 0613 short lesson, about 20 seconds
Borrowing That Fails
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The idea
Borrowing can also fail. If the funds go to consumption or to investments that do not raise productivity, the repayments still come due.
In practice
Several countries borrowed heavily in the nineteen seventies and eighties and were left with debt and no extra growth.
Where people slip
The deficit itself did not decide the outcome. What the borrowed money was spent on did.
Your place on the trail
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Builds on
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