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Usagi
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Posted: 03 Dec 2011 at 08:17 \| IP Logged

Can you please help me to understand this?

I don't know the meaning of 'ease the debt servicing burdens of debtor nations'. I can't understand the meaning of the question and answer...
Please help me....

Bisk 50-61 120

What situation would ease the debt servicing burdens of debtor nations that primarily sell raw materials to the US?

a. Increases in US food exports
b. Increases in US import tariffs
c. A US economy in expansion with stable money supply growth
d. A US economy in recession with stable money supply contraction

The answer is (c)

In and expanding US economy, there is increase demand for raw materials, so a nation exporting raw materials to the US would benefit.
Stable money supply increases during growth periods also tend to lower interest rates.

ramplacentia
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Posted: 06 Dec 2011 at 17:58 \| IP Logged

some times you should use elimination process to get to the right answer.

a) exports in US will not help the country which is exporting to US

b) Increase in US tariff - will adversely effect the country which is exporting to US

d) US economy in recession - why will they import - then exporting country will not be benefitted by recession in US

Correct answer

c) A US economy in expansion

US will import more

with stable money supply growth

US will pay money for its imports promptly

This will help to ease the debt servicing burdens

Exporting country will take loans from financial institutions to support their exports. They have to pay interest.

A stable money supply and increased exports will help the exporting country.

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Usagi
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Posted: 13 Dec 2011 at 01:18 \| IP Logged

Dear ramplacentia,

Thank you very much for me teaching the elimination method. I didn't know that well. I have another question. What is dept servicing burden? I'm very happy if you teach me as well.

Usagi

ramplacentia
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Posted: 13 Dec 2011 at 22:56 \| IP Logged

Hi Usagi,

"Debt servicing burden" Interest charges on debt is burden to the company.

Usagi wrote:

Dear ramplacentia,

Thank you very much for me teaching the elimination method. I didn't know that well. I have another question. What is dept servicing burden? I'm very happy if you teach me as well.

Usagi

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Usagi
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Posted: 14 Dec 2011 at 02:03 \| IP Logged

Dear Ramplacetia,

Thank you now I got it. Now I understand the interest is burden to the company.

Usagi

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