Argentina Defaulted on Its International Debt and the Argentine Peso

question 114

Multiple Choice

Argentina defaulted on its international debt and the Argentine peso depreciated by more than two-thirds in 2001. Why would you expect that, in 2007, most lenders will only make loans to Argentina that are denominated in dollars, euros, or a currency other than the Argentine peso?

• A) Lenders fear that another default will be accompanied by a significant depreciation of the Argentine peso.
• B) Lenders fear that another default will be accompanied by a significant appreciation of the Argentine peso.
• C) In case of a default, lenders will always be repaid if the loans are dollar-denominated than peso-denominated.
• D) In the case of a default, lenders are less likely to be repaid if the loans are Argentine peso-denominated.

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Definitions:

Future Generations

Refers to the people who will live in the future, whose interests are considered in various aspects of planning and policy-making, especially in environmental and sustainability contexts.

Keynesian Analysis

An economic approach that emphasizes the role of aggregate demand in influencing economic output and inflation.

Monetary Policy

The process by which a central bank or monetary authority controls the supply of money in an economy, often targeting interest rates to achieve economic objectives.

Consumption Tax

A tax levied on the purchase of goods and services, which can include value-added tax (VAT), sales tax, or excise taxes.