Question:
A Sovereign Debt Default occurs when:
(1) a country’s imports exceed its exports.
(2) a government fails to meet its debt service payments (principal or interest) on time.
(3) the central bank devalues the currency.
(4) the stock market crashes.
(5) a government borrows money from the IMF.
Correct Answer:
(2)
Answer Explanation:
Default is a legal event where a borrower (the government) breaks the loan contract by not paying what is owed. Sri Lanka experienced this in April 2022.
Topic: Money and Banking Year: 2024
Leave a Reply