High Dependence on Foreign Finance and a Move Toward External

question 13

True/False

High dependence on foreign finance and a move toward external debt denominated in foreign currencies explains the breakdown of emerging market economies during the recent global financial and economic crisis.

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Definitions:

Diamond/Water Paradox

An observation in economics illustrating how water, which is essential to life, is cheap, while diamonds, which do not sustain life, are expensive.

Bundle of Goods

A combination of different goods and services that are considered together, often in the context of consumer choice, preferences, and budget constraints.

Total Price

The complete cost of purchasing a product, including all taxes and fees.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute one good for another that is relatively cheaper.