Chapter21: Contemporary Issues In The U.s. Economy
Section: Chapter Questions
Problem 4DQ
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Question
Is debt good for the Pakistani economy? Discuss pros and cons in light of theory.
Expert Solution
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No, the debt is not good for the Pakistani economy as the negative effect is more than the positive effect of debt. The Pakistani economy is not using the borrowing money to increase the economic growth instead the economy is using debt money on non-development activities like military expenses. Also, the tax collections very low in Pakistan and the tax to GDP ratio is one of the lowest in the world which is making the government budget deficit worst.
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