Sovereign debt crises are triggered ________.

Question

Quizplus · Accepted Answer

Sovereign debt crises are triggered when a country's debt-to-GDP ratio becomes excessively high, indicating that the country may struggle to repay its debt obligations. Things like low economic growth or unpredictable economic environment can eventually increase the ratio of debt to GDP, leading to a debt crisis. Other factors like political unrest, mismanagement of finances, and high inflation can also lead to a sovereign debt crisis. However, external factors like innovations in subprime real estate markets, the adoption of a common currency, or austerity measures leading to a sharp fall in the supply of government bonds may contribute to the severity of the crisis but may not be the primary cause.

Sovereign Debt Crises Are Triggered ________