Final answer:
True or false, debt can be a tool for wealth creation if managed wisely. Enlightenment thinkers believed wealth could be created, suggesting the strategic use of debt. However, as debt increases, interest and government deficits can grow without careful management.
Step-by-step explanation:
The statement “Debt is a tool to use to make you wealthy” can be both true and false depending on the circumstances and how debt is managed. In the context of managing a country's economy, as debt increases, interest payments also rise, leading to the growth of the deficit if other government spending is kept constant. However, in economic history, Enlightenment thinkers rejected the mercantilist idea that wealth is finite, promoting the idea that wealth could be created, which implies that, if used wisely, debt can potentially be a tool for wealth creation. This entails investing borrowed funds into ventures or assets that will generate returns higher than the cost of the debt. Nonetheless, it is critical to manage debt responsibly to avoid financial strain from accumulated interest and the possibility of a debt spiral, where continuously borrowing to pay off existing debt leads to unsustainable financial situations. Therefore, the use of debt as a tool to build wealth must be strategic and prudent, with a clear understanding of the risks involved.