Carefully explain the pros and cons of borrowing from other countries
What will be an ideal response?
Borrowing from other countries can be less costly and there may be more funds available than in the domestic market. All other things equal, if the loans are used to finance economic activities that encourage growth, this can be a desirable things to do, since increased economic growth can more than cover the costs of debt service. However, if the loans are not used wisely, the cost of debt service can use a large amount of already-scarce government resources. These loans also require currency of other nations to repay (which usually means that there must be sufficient exports or other international payments to obtain the currency), and if the value of the nation's currency falls, the cost of debt service can increase significantly over time.
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As a result of moving more decision making from the periphery of the organization toward the center, typically
a. the flow of relevant information to the decision maker should be enhanced b. the flow of relevant information from the decision maker should be enhanced c. the incentive structure for the decision maker should be strengthened d. the incentive structure for the decision maker can be eliminated
One way to allocate the scarce good created from an effective price ceiling is to:
A. give them to the friends and family of the producers. B. offer it on a first-come, first-served basis. C. ration a certain quantity per household. D. All of these are examples of allocating using non-price methods.
You overhear a businessman say: "We want to be big because there are economies associated with bigness." What he means is that
A. total fixed cost decreases as more is produced. B. total cost decreases as more is produced. C. marginal cost decreases as more is produced. D. long-run average cost decreases as more is produced.
Which one of the following best exemplifies the principal-agent problem in the employer- employee relationship?
A. A worker takes 20-minute coffee-breaks although the employer allots only 15 minutes for this purpose. B. A worker is on the job 50 hours per week although only 40 hours are required for promotion. C. A worker opts for early retirement in response to the firm's incentive plan. D. A worker's productivity is independent of the wage paid.