Which of the following is a plausible effect of a rescue package provided to a country?
A. It can stimulate the outflow of capital from the country.
B. The rescue package can limit any contagion effects.
C. It immediately restarts new private foreign lending to the country.
D. It can help avoid the problem of moral hazard.
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Which of the following measures to resolve financial crises involves loan commitments to assist a country in getting through a crisis?
A. Debt repudiation
B. Loan amortization
C. A rescue package
Debt restructuring
Which is NOT a potential cost faced by nations that choose against repaying their debts?
A loss of future creditworthiness
B. A loss of foreign assets
C. Moral hazard
Domestic recession
Which of the following explains the spread of financial crises from one country to another?
A. Global contagion
B. Moral hazard
C. Butterfly trade
D. The Doppler effect
Which of the following identifies as a major force that can intensify an international financial crisis?
A persistent negative output gap
B. Current account convertibility
C. Dispute settlement procedures at the IMF
D. Global contagion