Why Did European Nations Begin to Default on Repaying Their

question 18

Multiple Choice

Why did European nations begin to default on repaying their debts to the United States in the late 1920s?

• A) They had begun massive rearmament programs.
• B) They were experiencing severe inflation.
• C) They were pouring massive sums into social welfare programs.
• D) They depended on reparations payments from Germany to pay their loans and, since American banks had stopped making loans to Germany, those reparations payments ceased.

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Definitions:

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service versus the total amount they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a product versus what they actually receive in the market.

Marginal Benefit

The increased benefit or value received from the consumption or creation of one more unit of a good or service.

Marginal Cost

The investment required to manufacture an additional unit of a product or service.