Government Authorities Are More Likely to Allow Subsidiary Repayment of a Loan

question 53

Multiple Choice

Government authorities are more likely to allow subsidiary repayment of a loan to a large international bank than to a parent firm because

• A) stopping payment to an international bank would have a negative impact on the credit image of the country.
• B) the government is also borrowing money from that bank and wants a larger loan before they choose to default.
• C) corrupt government officials have accounts at the bank and they have made an under-the-table agreement not to withhold funds from that bank.
• D) none of the above are true.

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Definitions:

5-Year Loan

A type of loan that is scheduled to be repaid through payments over a period of five years.

Expected Inflation Rate

The anticipated rate at which the general level of prices for goods and services will rise over a period, affecting purchasing power.

Consumption Sector

A segment of the economy focused on the purchasing and use of goods and services by individuals and households.

Production Sector

The segment of the economy concerned with the production of goods and services, including agriculture, manufacturing, and construction.