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Chapter 32: Problem 1

We became a debtor nation in (LO4) a) 1975 c) 1985 b) 1980 d) 1990

Short Answer

Expert verified
The correct answer for the year the country became a debtor nation is 1985 (option c). A debtor nation is a country that has a negative balance of payments, meaning it owes more than it is owed in terms of international trade. This can indicate economic activity and investment in future growth, but consistently high debt levels can lead to instability and pressure on a nation's currency.

Step by step solution

01

Correct Answer

The correct answer for the year the country became a debtor nation is 1985 (option c).
02

Understanding Debtor Nation

A debtor nation is a country that has a negative balance of payments, or simply, it owes more than it is owed in terms of international trade. Being a debtor nation is not necessarily a bad thing as it often indicates that a country is economically active and investing in future growth. However, a consistently high debt level can lead to economic instability and put pressure on a nation's currency. By understanding the concept of a debtor nation and knowing the correct answer in the given context, you can now analyze similar historical facts and have a better understanding of a country's economic situation during a particular time period.

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Most popular questions from this chapter

If a Japanese DVD player priced at 12,000 yen can be purchased for \(\$ 60\), the exchange rate is (LO3) a) 200 yen per dollar. d) 200 dollars per yen. b) 20 yen per dollar. e) none of the above. c) 20 dollars per yen.

Which of the following is false? (LO3) a) The gold standard will work only when the gold supply increases as quickly as the world's need for money. b) The gold standard will work only if all nations agree to devaluate their currencies simultaneously. c) The gold standard will work only if participating nations are willing to accept periodic inflation. d) The gold standard will work only if participating nations are willing to accept periodic unemployment.

Running mounting current account deficits is analogous to (LO4) a) running up debt on a credit card b) taking money out of one pocket and putting it in another c) owing money to ourselves d) borrowing money that never has to be repaid

Which of these is the most accurate statement? (LO4) a) There is no basis for the claim that the United States is living beyond its means. b) Our current account deficit is not a serious problem. c) Our trade deficit is a major economic problem. d) Since 2002 the dollar has been rising against most major currencies.

If we were on an international gold standard, (LO3) a) inflations would be eliminated b) recessions would be eliminated c) trade deficits and surpluses would be eliminated d) no nation would ever have to devaluate its currency
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