Nations that are considering default rather than restructuring or repayment face costs. Which of the following is NOT a cost of default?
A) the ability to enjoy the use of the borrowed funds without the pain of repayment
B) exclusion from credit markets, which can cause a reduction in consumption
C) lost opportunity to invest or purchase needed imports for trade
D) higher risk premiums for all borrowers and financial disruption

Question

Quizplus · Accepted Answer

The ability to enjoy the use of the borrowed funds without the pain of repayment is not a cost of default, but rather a perceived benefit. The other options are all costs of default.

Nations That Are Considering Default Rather Than Restructuring or Repayment