Complete the Following Sentence.Foreign Borrowing

question 113

Multiple Choice

Complete the following sentence.Foreign borrowing

• A)always leads to a lower level of consumption in the future for the debtor nation because part of its future GDP is used to pay off the foreign debt.
• B)always leads to a higher level of consumption in the future for the debtor nation because foreign borrowing enables a greater than otherwise possible increase in the nation's capital stock.
• C)could lead to higher consumption levels in the future, if the borrowing is used to finance investment that generates economic growth.
• D)could lead to lower consumption levels in the future, if the borrowing is used for current consumption.
• E)C and D

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Definitions:

365-Day Year

A 365-day year is a calendar method used in finance that assumes all years have 365 days for the calculation of interest rates.

Exact Simple Interest

Exact simple interest is a calculation method where interest accrues on a principal sum at a constant rate over a specific time period, using a 365-day year for calculations.

365-Day Year

A method used in finance that assumes a year consisting of 365 days for calculating interest, ignoring leap years.

Exact Simple Interest

Interest calculated on the initial principal of a loan or deposit, based on a precise calculation method rather than the common approximation methods.