Which of the following is a plausible effect of a rescue package provided to a country?
A)It can stimulate the outflow of capital from the country.
B)The rescue package can limit any contagion effects.
C)It immediately restarts new private foreign lending to the country.
D)It can help avoid the problem of moral hazard.

Question

Quizplus · Accepted Answer

A rescue package can limit any contagion effects by providing the country with financial stability and preventing a potential domino effect on other economies. However, it may also involve conditions and reforms imposed on the country's economy in exchange for the financial support. Options A, C, and D are unlikely effects of a rescue package.

Which of the Following Is a Plausible Effect of a Rescue