In the Two-Period Model with Default, If the Nation Defaults

question 44

Multiple Choice

In the two-period model with default, if the nation defaults on its debts in the future period

• A)it bears a cost v.
• B)the central bank must bail out the government.
• C)collateral is seized.
• D)there are no consequences.
• E)it faces a higher interest rate.

---

Definitions:

Fixtures

In real estate, fixtures are items of personal property that are attached or fixed to the land or building in such a way that they become part of the real property.

Perfected

A legal term indicating that an interest or lien on a property has been legally completed and registered, making it enforceable against third parties.

Goods

Tangible personal property, which includes physical items that can be seen, touched, and possessed.

Conflicting Interests

Situations where competing priorities or obligations cause a conflict for an individual or organization, potentially leading to ethical dilemmas.