Explain "haircuts" when a government defaults its debt

What will be an ideal response?


Default is often partial and creditors take is what is known as a haircut. A haircut of 40%, for example, means that creditors receive 60% of they were owed.

Economics

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Barter is the:

A. direct exchange of goods and services. B. exchange of goods, but not services. C. system that does not depend on a coincidence of wants. D. system used in advanced economies.

Economics

Refer to the figure below.________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________, 

A. Rising; B; C B. Falling; A; C C. Falling; A; B D. Rising; A; C

Economics

Refer to Table 21.5:Table 21.5QTFCTVCTCAVCMC0  15--1  23  2    43 15   The marginal cost of the third unit of output in Table 21.5 is

A. $15. B. $4. C. $30. D. $3.

Economics

The most common form of zero-coupon bonds found in the United States is:

A. municipal bonds. B. AAA rated corporate bonds. C. 30-year U.S. Treasury bonds. D. U.S. Treasury bills.

Economics