Consider the model of sovereign debt and default as discussed in lectures. An increase in the lending rate leads to Select one: a. a decrease in the default probability. b. an increase in the default probability. c. inward shift of the consumption after repayment line (Y - (1+rL)L). d. inward rotation of the consumption after default line (Y - cY). Clear my choice

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Consider the model of sovereign debt and
default as discussed in lectures. An increase
in the lending rate leads to
Select one:
a. a decrease in the default probability.
b. an increase in the default probability.
c. inward shift of the consumption after
repayment line (Y - (1+rL)L).
d. inward rotation of the consumption after
default line (Y - cY).
Clear my choice
Transcribed Image Text:Consider the model of sovereign debt and default as discussed in lectures. An increase in the lending rate leads to Select one: a. a decrease in the default probability. b. an increase in the default probability. c. inward shift of the consumption after repayment line (Y - (1+rL)L). d. inward rotation of the consumption after default line (Y - cY). Clear my choice
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