To Reduce Their Exposure to Developing Country Debt,lending Commercial Banks

question 50

Multiple Choice

To reduce their exposure to developing country debt,lending commercial banks have practiced all of the following except:

• A) Making outright loan sales to other commercial banks
• B) Reducing their capital base as a cushion against losses
• C) Dealing in debt-for-debt swaps with foreign governments
• D) Dealing in debt/equity swaps with foreign governments

---

Definitions:

Government Purchases

Government purchases refer to spending by government entities on goods and services that directly contribute to the economy's aggregate demand.

Aggregate Demand

The total demand for all goods and services within a particular market or economy.

Government Impact

Refers to the effects of government policies and actions on an economy's performance and the well-being of its citizens.

Marginal Propensity

Marginal propensity refers to the proportion of an additional income that an individual consumes rather than saves.