In 1971,US

question 104

Multiple Choice

In 1971,U.S.trade figures showed that for the first time since 1945,the United States was importing more than it was exporting.This set off massive purchases of:

• A)U.S.dollars.
• B)German deutsche marks.
• C)British pounds.
• D)Japanese yen.

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Definitions:

Default Risk

The risk that a debtor will not make the required payments on their obligations, leading to financial loss for the creditor.

Higher Interest Rates

Increased costs of borrowing which can impact loan demand, savings rates, and overall economic activity.

Debt Covenants

Restrictions lenders put on borrowing agreements to maintain certain financial ratios and ensure the borrower's financial stability.

Signaling Function

The act of conveying information indirectly through actions or behaviors, often used in economics and finance to indicate future intentions or the current state of affairs.