If a Nation Has Default Costs (Punishment Costs) = C

question 127

Multiple Choice

If a nation has default costs (punishment costs) = c, as a percent of GDP, every extra dollar paid toward the debt is equivalent to:

• A) a dollar's saving in interest over time.
• B) giving more income to the creditors.
• C) a loss of consumption of (1 - c) dollars.
• D) raising the burden of the debt by 1/(1 - c) dollars.

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Definitions:

Shareholder's Derivative Suit

A lawsuit brought by a shareholder on behalf of a corporation against a third party, often the corporation's executives or directors, alleging harm to the corporation.

Reasonable Supervision

The oversight effort expected from a person in a supervisory role to ensure subordinates are performing tasks lawfully and ethically.

Corporate Employees

Individuals who work for a corporation and are often subject to its policies, benefits, and regulations.

Environmental Statutes

Laws enacted to protect the environment from pollution and to regulate natural resource usage.