If a country cannot internationalize its debt, then it will have to:
A)sell more bonds domestically, causing its interest rates to fall.
B)sell more bonds domestically, causing its interest rates to rise.
C)buy more bonds domestically, causing its interest rates to fall.
D)buy more bonds domestically, causing its interest rates to rise.

Question

Quizplus · Accepted Answer

When a country cannot internationalize its debt and has to sell more bonds domestically, it increases the supply of bonds in the domestic market. To attract buyers, the country has to offer higher interest rates, causing its interest rates to rise.

If a Country Cannot Internationalize Its Debt, Then It Will