What economic condition might indicate unsustainable growth?

What economic condition might indicate unsustainable growth?

• A. Balanced trade
• B. High levels of borrowing
• C. Stable employment rates
• D. Low inflation

Answer: (B)

High levels of borrowing can indicate unsustainable growth because they often suggest that consumers and businesses are taking on debt to finance spending and investment, which may not be sustainable in the long run. When borrowing is excessively high, it raises concerns about the ability to repay that debt, especially if economic conditions change. For example, if interest rates rise or if there is an economic downturn, borrowers may struggle to meet their obligations, potentially leading to higher rates of defaults and financial instability. Consequently, while borrowing can enable growth in the short term, if it is not backed by sufficient income or economic productivity, it can lead to economic imbalances, making it an indicator of potential unsustainability in growth patterns.

High levels of borrowing can indicate unsustainable growth because they often suggest that consumers and businesses are taking on debt to finance spending and investment, which may not be sustainable in the long run. When borrowing is excessively high, it raises concerns about the ability to repay that debt, especially if economic conditions change. For example, if interest rates rise or if there is an economic downturn, borrowers may struggle to meet their obligations, potentially leading to higher rates of defaults and financial instability. Consequently, while borrowing can enable growth in the short term, if it is not backed by sufficient income or economic productivity, it can lead to economic imbalances, making it an indicator of potential unsustainability in growth patterns.