Nations Must Consider the Costs of Default When Choosing a Course

question 106

Multiple Choice

Nations must consider the costs of default when choosing a course of action. Economists group these costs into:

• A) short run and long run.
• B) internal and external.
• C) financial market penalties and macroeconomic costs.
• D) monetary and real.

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Definitions:

Liability

The condition of having legal accountability for a debt or duty.

Fiduciary

An individual or organization that acts on behalf of another person or persons, putting their clients' interest ahead of their own, with a duty to preserve good faith and trust.

Utmost Loyalty

The highest level of faithfulness and allegiance one can show to another party, often used in contexts involving organizational, professional, or personal relationships.

Good Faith

The genuine desire to remain equitable, transparent, and truthful, no matter what the result of the engagement is.