Question

According to the model of intertemporal​ trade, a country is most likely to borrow internationally if...

According to the model of intertemporal​ trade, a country is most likely to borrow internationally if

A.

The returns on investment in this country are high.

B.

The returns on investment in this country are low.

C.

This country is producing more than it can consume.

D.

This country is producing less than it can consume.

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Answer #1

When there is an international borrowing and lending, then this is called intertemporal trade. Usually countries with profitable investment opportunities borrow funds today and repay lenders in the future. In this way both borrowers and lenders are benefitted.

Hence it can be said that according to the model of intertemporal​ trade, a country is most likely to borrow internationally if the returns on investment in this country are high.

Hence option A is the correct answer.

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