Whenever a Nation Has Substantial External Debts and Assets Denominated

question 140

Multiple Choice

Whenever a nation has substantial external debts and assets denominated in foreign currency:

• A) it is easier to manage, since changes in value are often offsetting.
• B) there can be large and destabilizing wealth effects.
• C) its interest payments on the debt will be matched by interest earnings on the assets.
• D) the risk of default becomes very large.

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Definitions:

Military

Refers to the armed forces of a country, responsible for defending its borders and national interests.

Authoritarian Government

A form of government characterized by strong central power and limited political freedoms, essentially synonymous with authoritarian states.

Egalitarianism

A belief in human equality, especially with respect to social, political, and economic rights and privileges.

Collective Ownership

The holding of property or assets by all members of a group or community, sharing both rights and responsibilities.