Paying Off Debts and Aggregate Demand

In the first episode, 456 desperate contestants enter a game to win enough money to pay off their crippling debt and start fresh. South Korea has experienced an increase in household debt in the past few years. The debt-to-GDP ratio is one of the highest among developed economies. In December 2020, South Korean household debt levels were 106.6% of the country’s nominal GDP. The increasing debt is driven by rising house prices, reduced savings rates, and low interest rates. A crippling debt will reduce consumption and investment and lead to a decrease in aggregate demand (AD), shifting the AD curve to the left.

Thanks to Amel Ben Abdesslem for identifying this clip!

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