High levels of government debt that raise investors' fear of a government default on debt will result in capital
And a(n) of the country's exchange rate.

Question

Quizplus · Accepted Answer

High levels of government debt increase the risk of default, which in turn causes investors to become fearful and pull money out of the country (outflows). The decrease in demand for the country's currency then results in a currency depreciation.

High Levels of Government Debt That Raise Investors' Fear of a Government