Indebtedness Became a Major Problem in the World Economy in the 1980s

question 1

Multiple Choice

Indebtedness became a major problem in the world economy in the 1980s. Debt service must be met before other obligations of governments. Why did this happen?

• A) recycled dollars from oil purchases were lent recklessly and rising interest rates later trapped borrowers
• B) economic growth goals were too ambitious
• C) banks raised interest rates and refused to negotiate new ones
• D) previously colonial powers paid off debts