Question

I need to the analyzing this question using Statistics

They way our country spends more money than it takes in? Support your views with statistical reports or documentation.

Answer 1

Answer :

If the money is spent/invested on better assets like indigenous manufacturing, up-to-date technology, more job creation (better life style of citizens), cutting edge research (R&D) and the likes, over time the debt will eventually be repaid. The Japanese economic miracle leading to a magnificent recovery from the recession during the post World War 2 era is a testament for this. Japan’s Gross Domestic Product (GDP) increased by a rather amazingly large average of 9.2% between 1956 and 1973, and even after the world recession caused by the rise in oil prices in the 1970’s, still grew by an average 4.1% up through 1989. Helped by record outputs of such manufactured goods as ships, electronic equipment and cars, the “economic miracle” quickly transformed this small island nation into one of the world’s top economic giants. In 1931 the ratio of direct (equity, meaning stocks issued to the public or to some other private companies) to indirect (bank loan) financing of industry was roughly 9:1. By 1935, it was 7:3, and by 1945, as in the mid 1960s, it was 1:9 (meaning for every dollar a company got from issuing stocks, it got nine dollars from bank loans).

But if the money is not spent wisely, there would be a serious possibility of an economic meltdown. The recent European debt crisis provides a relevant example for the ill-effects of careless expenditure.

(Source/reference for more statistics: https://en.wikipedia.org/wiki/European_debt_crisis)

The crisis had significant adverse economic effects and labor market effects, with unemployment rates in Greece and Spain reaching 27%.