The 1998 default by the Russian government had results that were predictable using the textbook model. Which of the following best describes what happened?
A)The event increased Russian interest rates and net exports.
B)The event reduced Russian interest rates and net exports.
C)The event increased Russian interest rates and reduced Russian net exports.
D)The event reduced Russian interest rates and increased Russian net exports.

Question

Quizplus · Accepted Answer

The default led to a loss of investor confidence, causing capital flight and a depreciation of the ruble, which increased interest rates and made Russian goods cheaper abroad, thus increasing net exports.

The 1998 Default by the Russian Government Had Results That