Which of the Following Can Be a Possible Effect on a Borrowing

question 52

Multiple Choice

Which of the following can be a possible effect on a borrowing nation if the real interest rate on the loans rises?

• A)The fixed costs of nonrepayment can increase
• B)There will be a higher incentive to default
• C)a default imposes a smaller penalty on the borrower
• D)A default imposes a bigger penalty on the borrower

---

Definitions:

Death Rate

A measure often expressed as the number of deaths per 1,000 individuals per year, used to gauge the mortality level of a population.

Post Hoc

The fallacy of using the fact that one event preceded another as sufficient evidence for the conclusion that the first caused the second.

Fallacy

An incorrect reasoning technique that spoils the legitimacy of an argument.

Chewing Gum

A soft, cohesive substance designed to be chewed without being swallowed, often used to freshen breath or for enjoyment.