Internationalization of the debt refers to a situation in which the deficit is financed by foreigners:
A)buying the debt, so that crowding out is avoided.
B)buying the debt, so that crowding out is increased.
C)selling the debt, so that crowding out is increased.
D)selling the debt, so that crowding out is avoided.

Question

Quizplus · Accepted Answer

Internationalization of the debt occurs when foreigners buy a country's debt, which can help avoid crowding out. Crowding out is a situation where increased government spending leads to a reduction in private sector investment. By financing the deficit through foreign investment, the domestic supply of funds is not reduced, which helps in avoiding the crowding out effect.

Internationalization of the Debt Refers to a Situation in Which