How did changes in world interest rates contribute to the explosion of debt in the 1970s? What happened in the early 1980s to reverse this?
What will be an ideal response?
Rising inflation in the 1970s led to falling real interest rates, spurring borrowing by many developing-country governments. Higher nominal rates and lower inflation in the early 1980s reversed the situation, making continued borrowing more expensive.
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If Japanese workers are more productive than French workers then trade between Japan and France
A) can take place only if France has an absolute advantage in producing a good or service Japanese buyers want. B) cannot take place because Japanese goods and services will be less expensive than French goods and services. C) cannot take place until French workers become more productive. D) will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want.
From November 1993 to December 1994, the Democratic Republic of the Congo experienced an inflation rate of 69,502. This economic condition would best be described as:
a. Cost-push inflation b. A cost-of-living adjustment c. Anticipated inflation d. Hyperinflation