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Can I pause the game before I use a counter target spell?
For example, they play a spell and I don't know what it is, so I say "hold on", take 7 seconds to read it, then decide to counter - or, do I have to skip the time to read it and decide whether to counter it without even knowing what the card does, sort of like a guess.
You can't "pause" the game, as the game isn't progressing by itself. Instead, it progresses only when all players agree that the game should go on, which most of the time means to pass priority. The most relevant rule to this is:
500.2. A phase or step in which players receive priority ends when the stack is empty and all players pass in succession. Simply having the stack become empty doesn't cause such a phase or step to end; all players have to pass in succession with the stack empty. Because of this, each player gets a chance to add new things to the stack before that phase or step ends.
Each time a player acts in a way that uses the stack, such as cast a spell, there's a round of priority, as defined by the rules, which (as stated above) all players have to pass in succession in order to progress.
So not only do you get to take the time to read and understand the card, but you get to think about in what way, if at all, you want to respond. You may even ask a Judge or another player for clarifications on cards or rules. This is true at all times, for example if you're simply in need of clarification of the game state.
Nothing that isn't clearly labelled as such or banned in tournament play is luck- or random-based, requires manual dexterity, or requires fast reflexes or high reaction.
In a tournament scenario, the only requirement is to do this in a timely manner ("playing at a reasonable pace") to avoid Slow Play, which means you're not allowed to stall the game by thinking about what you want to do for more than a sensible period of time in order to not slow down the tournament as a whole, or take an unfair amount of the shared round time for yourself. What that timespan is depends on the game situation, but you will always be given enough time to read a card that's reasonably unknown to you, and understand what it does.
It isn't expected of you at any tournament level that you know all Magic cards out there, however it's expected at any level that you keep track of the game state and don't re-evaluate the entire board before making a decision.
The reason you might be thinking there's a certain time limit to take action is that the Duels of the Planeswalkers games include an automatically progressing bar that gives you only so much time to react. This is supposedly done to prevent idling players from stalling the game, but has nothing to do with the paper version of the game.
Although other answers have addressed your specific question, let me put it a different way that will serve you well in general: real time has (almost) no role in Magic. In other words, it basically never matters how long you take to perform any action in the game.1 Don't let anyone (except an acting judge) tell you otherwise.
A game of Magic is a sequence of steps - actions and decision points - which you and your opponent(s) have to go through in order.2 All you have to do is maintain the order. You don't have to stick to any time-based schedule.1
1Two exceptions: in a tournament, there is a time limit on the round as a whole (e.g. 50 minutes per match), but that does not affect the timing of individual actions within the game. Also, if you are taking an excessive amount of time between actions, that is slow play and is illegal, but it's a subjective criterion, for a judge to decide on. There's no specific number of seconds or anything like that.
2Actually, you don't have to stick to the exact order. The rules allow for out-of-order sequencing, which basically means you can do certain actions out of order as long as it doesn't confuse anybody.
You have the chance to read the card. When a spell is cast, it is put on the stack. Before it can resolve, both players have to pass priority. While you have priority, you can read the card and choose to cast a counter spell.
Now, if this is online, then you might have to take an action to say "Wait, I don't just want this to resolve immediately, I want to hold priority".
