The Baker Plan for addressing the debt crisis was based on the assumption that
A) most countries would eventually default on their debt.
B) forgiveness of some of the debt was inevitable.
C) renewed lending by U.S. and European banks would undermine push for economic reforms.
D) hyperinflation would eventually reduce the real value of the debt.
E) renewed lending by U.S. and European banks would restore growth and make the debt manageable.
E
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Under a floating exchange rate, the exchange rate
A) is determined by the interaction of supply of the currency and demand for the currency. B) is controlled by central bank intervention. C) is pegged against the euro. D) will change whenever the price of gold changes.
In cities with rent controls, the actual rents paid can be higher than the legal maximum. One explanation for this is
A) rent control laws are so complicated that landlords and tenants may not be aware of what the legal price is. B) landlords are allowed to charge more than the legal maximum on some apartments so long as they charge less on others. C) the legal penalty landlords face for charging more than the legal maximum rent is less than the revenue earned by charging their tenants more than the maximum rent. D) because there is a shortage of apartments, tenants often are willing to pay rents higher than the law allows.