In the Two-Period Model with Default, Default Can Be Prevented

question 49

Multiple Choice

In the two-period model with default, default can be prevented because

• A) collateral can be seized.
• B) no one will lend of a country that might default.
• C) default can be too costly, so a country does not choose it.
• D) a country does not want to reveal itself to be a bad borrower.
• E) the government makes it illegal.

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Definitions:

Classical Conditioning Procedure

A learning process that occurs when two stimuli are repeatedly paired together; a response that is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.

Temporal Conditioning

A form of classical conditioning where the timing of the conditioned stimulus (without an unconditioned stimulus) is enough to produce a conditioned response.

Simultaneous Conditioning

A classical conditioning method where both the conditioned and unconditioned stimuli are presented at the same time.