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16 March, 05:27

The peripheral country dilemma of having constantly to borrow in order to fund economic development is known as:

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Answers (2)
  1. 16 March, 06:55
    0
    debt trap

    Explanation:

    In simple words, debt trap refers to the situation when a company keeps on incurring debt for repaying off the loans taken earlier. It is called trap as the amount of interest on loan keeps on building up making it impossible for the firm to pay it off completely.

    Usually the firms starts getting in debt trap when they lack of funds or due to failure of the specific project for which the loans has been taken specifically. Once the firm gets inside such a situation stepping back becomes nearly impassible leading to complete shut down of the firm.
  2. 16 March, 07:01
    0
    The peripheral country dilemma of having constantly to borrow in order to fund economic development is known as DEBT TRAP

    Explanation:

    Debt traps is a situation in which it is difficult or not possible for a person that borrowed to pay back money that he has borrowed. These traps are usually caused by high interest rates and short terms, and are a hallmark of a predatory lending. Paying back borrowed money is paying back both the principal and the interest.

    A debt trap occurs when a borrower is unable to make payments on the loan principal; instead, they can only afford to make payments on the interest. Because making payments on the interest does not lead to a reduction in the principal, the borrower never gets any closer to paying off the loan itself.
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