Although a net-debtor country may initially benefit from an inflow of savings from abroad,over the long run continued borrowing results in growing dividend payments to foreigners and a drain on the debtor-country's economic resources.

Question

Quizplus · Accepted Answer

This statement is true as the continued borrowing by a net-debtor country results in growing dividend payments to foreigners, which ultimately drains the economic resources of the debtor-country.

Although a Net-Debtor Country May Initially Benefit from an Inflow