Complete the following sentence.Foreign borrowing
A)always leads to a lower level of consumption in the future for the debtor nation because part of its future GDP is used to pay off the foreign debt.
B)always leads to a higher level of consumption in the future for the debtor nation because foreign borrowing enables a greater than otherwise possible increase in the nation's capital stock.
C)could lead to higher consumption levels in the future, if the borrowing is used to finance investment that generates economic growth.
D)could lead to lower consumption levels in the future, if the borrowing is used for current consumption.
E)C and D

Question

Quizplus · Accepted Answer

Foreign borrowing can have different effects on future consumption levels depending on how the borrowed funds are used. If the funds are invested in projects that generate economic growth, they can lead to higher consumption levels in the future. However, if the funds are used for current consumption, they will not generate economic growth and will have to be paid back in the future, leading to lower consumption levels.

Complete the Following Sentence.Foreign Borrowing