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Whereas such debts affect the financial status of individuals, they also affect international economies in the long run. This is because the economy of states largely relies on consumer spending…
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Download file to see previous pages... It is through spending that people can pay wages.
Credit card debt will also reduce the rate of consumption. When consumption is affected, industries that manufacture goods and render services will also be affected. Industries significantly influence the economy through the contribution of revenue. Their inability to generate revenue will affect the national economic stability to a large extent. In reference to the international political economy, such a situation may consequently affect national policies (George 19). Policies play an important role both politically and economically. Any attempt to introduce or eliminate national policies can lead to international political instability.
The inability of governments to borrow is yet another consequence. This will majorly affect third world countries because if creditors such as the United States are unable to accumulate money from taxes, they will not be in a position to lend. It is difficult for states to be sustainable without funds (George 20). Such situations can negatively affect factors such as the rate of national investment hence posing a threat to both political and economic ...Download file to see next pagesRead More
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