Explain why the distinction between debt and equity finance is useful in analyzing the response of developing countries to unforeseen events such as recession or terms of trade change?
What will be an ideal response?
When a country's liabilities are in the form of debt, its fixed scheduled payments to creditors do not fall when its real income falls. This makes it difficult to honor the developing country's foreign obligations and may lead to default.
You might also like to view...
How do firms estimate the demand for labor?
What will be an ideal response?
Which of the following is an implication of the classical model?
a. The supply of loanable funds curve is downward sloping. b. The inflation rate is constantly rising. c. Fiscal policy only changes the amount of consumption, investment and government spending, not the amount of output produced. d. Monetary policy can change both the interest rate and real output. e. The interest rate can only be changed by monetary policy, not by changes in government spending.
Poverty is a mainstream event experienced by a majority of Americans
a. True b. False Indicate whether the statement is true or false
Given that resources are scarce:
A.) A "free lunch" is possible, but only for a limited number of people. B.) Poor countries must make choices, but rich countries do not have to make choices. C.) Opportunity costs always exist whenever choices are made. D.) Some choices involve opportunity costs while other choices do not.