In the Two-Period Model with Default, Default Can Be Prevented

Multiple Choice

In the two-period model with default, default can be prevented because

A) collateral can be seized.
B) no one will lend of a country that might default.
C) default can be too costly, so a country does not choose it.
D) a country does not want to reveal itself to be a bad borrower.
E) the government makes it illegal.