large government deficit relative to GDP,a high rate of money expansion accompanied by fixed exchange rates,along with substantial government expenditures are some of the common characteristics of _________ risk.

Question

Quizplus · Accepted Answer

These characteristics are common in countries with high country risk, which refers to the potential losses that investors may face due to political and economic instability in a particular country. The large government deficit relative to GDP, high rate of money expansion, and substantial government expenditures can lead to inflation and currency devaluation, which increase investment risk. Fixed exchange rates can also be risky because they may not accurately reflect the underlying economic fundamentals, and sudden changes in exchange rates can cause significant losses for investors. Overall, these factors contribute to a high level of uncertainty and volatility in the economy, making investing in the country riskier than in more stable economies.

Large Government Deficit Relative to GDP,a High Rate of Money