Question

Differentiate between productive and unproductive debt.

Differentiate between productive and unproductive debt, citing an example of each.

Distinguish between productive debt and unproductive debt with examples.

Answer 1

	Productive debt	Unproductive Debt
1.	These debts are incurred by the government for the projects that yield income.	These debts are those that are incurred on projects that do not yield any income.
2.	Generates future income or capital assets for the economy.	Does not generate any return or assets for the country.
3.	Enhances the productive capacity and promotes economic growth.	Puts a burden on government finances without contributing to growth.
4.	Examples of Productive debt include the construction of power projects, railways, and other infrastructure.	Examples include financing a war or using debt to cover a budget deficit, among others.