A likely consequence of debt default is:
A)a decrease in the federal cost of borrowing.
B)an increase in unemployment due to growing uncertainty.
C)a sudden decline in the market interest rates.
D)an increase in the credit flows in an economy.
E)a sudden increase in the investment flows in the economy.

Question

Quizplus · Accepted Answer

If a country defaults on its debt, investors may become uncertain about the country's ability to repay its debts in the future, which could result in a decrease in investments and a decline in economic activity. This could lead to higher unemployment rates in the country.

A Likely Consequence of Debt Default Is