Chat with AIExam 15: Debt and Development
Explain Kindleberger's theory of economic cycles and international lending.
(37) 
VerifiedThe cycle begins with a period of real growth with rising profits, through new technologies, transportation, or communications systems. When growth eventually outstrips productive investments, speculation begins, which is often linked to fraud and swindles. Kindleberger calls these bubble periods "mania." It involves international lending as banks exhaust domestic borrowing potential, and desperation to lend leads to high-risk foreign loans. Eventually the bubble bursts, prices fall, and a period of panic ensues when investors try to sell or collect loans, which ultimately leads to a "crash."
Describe the difference for international borrowers in the 1930s and those in the 1980s.
(35) VerifiedThe major difference between the 1930s and the 1980s was the existence of the Bretton Woods insti?tutions (BWIs). Poor countries became increasingly dependent on "aid," and the "donors" made their aid conditional on recipient countries having World Bank and IMF programs, which in turn imposed two sets of conditions. One was continued debt repayment. Little concession was made for economic problems such as bad crops, and debt bondage lasted indefinitely. Indeed, with respect to the Bretton Woods institutions, devel?oping countries have fewer rights than the citizens of Hammurabi's Babylon did nearly 4000 years ago.
According to Cheryl Payer, foreign loans commonly lead to successful development.
(35) VerifiedFalse
Loan pushing is when banks and lending agencies desperately borrow money that they can pay back easily.
(37) In what way can the shifting of the debt crisis to the Global South make that debt illegitimate?
(36) How can it be argued that much of the debt incurred by Zaire under Mobutu was illegitimate?
(29) Debt incurred by the Philippines for the building of the Bataan nuclear power station was forgiven on the grounds that the loan had been illegitimate.
(39) The "principal" is the total amount of money borrowed that must be repaid.
(39) In a growth period, lending can be profitable and promote productive investment.
(38) What was the "Heavily Indebted Poor Countries Initiative" designed to do?
(39) Foreign governments lend loans to developing countries because many of these loans are profitable for both parties and are repaid.
(36) Foreign holdings of US dollars sharply decreased in the first few years of the twenty-first century.
(34) What is "quantitative easing"? What role has it played in the 2008 financial crisis?
(37) Lending rules are now often inspired by which of the following?
(33) 
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