Borrowing in one's own currency has many advantages for low-income nations (such as Chile). Which of the following is NOT an advantage?
A) Service payments are usually retained in the nation.
B) Defaults are typically not an issue.
C) The nation is never obliged to repay—it can roll over the debt in perpetuity.
D) More national debt actually helps credit markets deepen and mature.
Ans: C) The nation is never obliged to repay—it can roll over the debt in perpetuity.
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If federal tax rates increased, what would happen to the interest rate on municipal bonds?
If people decide that some country is now a more risky place to keep their saving, then at the original interest rate in that country there is a
a. surplus of loanable funds, so the interest rate increases. b. surplus of loanable funds, so the interest rate decreases. c. shortage of loanable funds, so the interest rate increases. d. shortage of loanable funds, so the interest rate decreases.