LOL! That's not the question.
I'm more likely to only borrow in such an environment if I expect a higher than 3% return.
How high would your return have to be?
Are you less likely to borrow to fund consumption when your borrowing costs increase 3% each year?
I'm less likely to borrow to fund anything. Like new investment in manufacturing plants.
Are you more likely to save when your purchasing power increases 3% each year?
I am less likely to purchase. What happens to productively allocated savings when demand collapses? What happens to employment?
I'm sorry the world doesn't fit in the frame you're trying to construct. There are more ways to do things than your loaded question suggests
How high would your return have to be?
Sufficient to cover the debt, and superior to alternative investments.
I'm less likely to borrow to fund anything. Like new investment in manufacturing plants.
'Easy finance' more often than not encourages reckless finance. Do you think we need more or less Solyndra's?
I am less likely to purchase. What happens to productively allocated savings when demand collapses? What happens to employment?
'Demand' we can't afford is demand we don't need. That's the biggest problem with the world economy right now. What builds wealth - savings, or consumption? Demand built on savings is sustainable. Demand pyramided on debt is the core of the boom-bust cycle.