Answer to Question #90823 in English for Michael

Question

(A) one of the reason why developing countries are entangled in debt crisis is due to:

1. Borrowing of large sums of money from local market
2. Quadrupling of coal prices
3. Repayment in dollars and falling prices of primary products
4. Industrialization

Answer 1

Answer:

3. Repayment in dollars and falling prices of primary products

Explanation:

Developing/poor countries heavily borrow loans from diverse lenders. These loans are offered to them at market prices with high-interest rates and short maturity periods. The countries, in the end, find it difficult to coordinate between such diverse groups of creditors. Poor debt management systems, law enforcement policies, low revenue collection, and falling prices in commodity markets are some of the major causes of being heavily in debt.