After the 2008 financial crisis, interest rates on Italian debt increased because:
A)they were approaching the zero bound, so the central bank raised them.
B)the Italian government revalued the lira.
C)Italy imposed trade sanctions on Iran.
D)the Italian economy was growing too slowly to generate enough tax revenue to repay its public debt.

Question

Quizplus · Accepted Answer

The Italian debt increased due to slow economic growth, which led to a lack of tax revenue to repay public debt. This resulted in higher interest rates on Italian debt. Options A, B, and C are not relevant factors affecting Italian debt interest rates after the 2008 financial crisis.

After the 2008 Financial Crisis, Interest Rates on Italian Debt