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If a Country's External Debt Is 105 Percent of Its

Question 96

Multiple Choice

If a country's external debt is 105 percent of its Gross National Income (GNI) :


A) the debt is so small that it should have no effect on the economy.
B) the debt should be easily repaid since it only requires an increase in GNI of 5 percent.
C) the country owes 105 times as much to foreign lenders as its economy produces in one year.
D) the value of one year's worth of the economy's output is not enough to satisfy the country's debt to foreign lenders.

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