Foreign borrowing is consistent with development when:
A) the additional investment and imports are put to productive use.
B) it increases total imports.
C) it increases total savings.
D) a country can afford the debt service payments.

Question

Quizplus · Accepted Answer

Foreign borrowing can be beneficial for development if the funds borrowed are invested in productive activities, such as infrastructure or technology, that help to increase a country's overall productivity and potential for economic growth. Importantly, this must be done in a sustainable manner such that the increased imports do not outweigh the benefits gained from the borrowed funds. Additionally, the country must be able to pay back the debt service payments without negatively impacting its overall financial stability.

Foreign Borrowing Is Consistent with Development When