While the Brady Plan did not end the debt crisis, it was a ...

[khang]

While the Brady Plan did not end the debt crisis, it was a significant step toward greater stability in the Latin American region.
 
  Indicate whether the statement is true or false

Question 2

Carefully explain the pros and cons of borrowing from other countries.
 
  What will be an ideal response?

[dyrone]

Answer to Question 1

TRUE

Answer to Question 2

Borrowing from other countries can be less costly and there may be more funds available than in the domestic market. All other things equal, if the loans are used to finance economic activities that encourage growth, this can be a desirable things to do, since increased economic growth can more than cover the costs of debt service. However, if the loans are not used wisely, the cost of debt service can use a large amount of already-scarce government resources. These loans also require currency of other nations to repay (which usually means that there must be sufficient exports or other international payments to obtain the currency), and if the value of the nation's currency falls, the cost of debt service can increase significantly over time.