Explain the events that triggered the Debt Crisis and the Lost Decade
What will be an ideal response?
An acceleration in commercial bank lending and the rise in the amount of debt owed by Latin American economies made them vulnerable to a sudden and unforeseen economic shock. When oil prices fell in 1981, this reduced export earning in Mexico, which eventually made it unable to service its debt. Likewise, recession in many industrial countries reduced the demand for other primary commodities, and at the same time, world interest rates were rising. Thus for many Latin American economies, interest payment (at variable rates) increased at the same time that export earnings were falling, making them unable to pay the loans.
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When producers anticipate that the price of their product will increase in the future
A) the supply curve will shift to the right. B) the supply curve will shift to the left. C) the current production will move along on the supply curve. D) they will immediately lobby Congress to adjust prices now.
If U.S. goods became less desirable to the British, there would be
a. a rightward movement along the supply of British pounds curve in the dollar-pound market b. a leftward movement along the supply of British pounds curve in the dollar-pound market c. a rightward shift of the supply of British pounds curve in the dollar-pound market d. a leftward shift of the supply of British pounds curve in the dollar-pound market e. no change in the supply of British pounds curve in the dollar-pound market
In equilibrium, the monopsonist's labor demand will
A. Be greater than the marginal factor cost. B. Exceed labor supply. C. Equal labor supply. D. Be less than the marginal factor cost.
What would happen to the planned investment function if business taxes were decreased?
A. There would be a upward movement along the function. B. It would shift to the right. C. It would shift to the left. D. There would be no change.