Economics · May / June 2016 · Paper 12 · Question 25

Some people think that the debts and interest payments of the poorest countries in the world should be cancelled. What might be a disadvantage for the poorest countries if this were done?

1. AInternational banks might be less willing to give loans to poor countries.
2. BInterest payments to the lenders would fall.
3. CThe standard of living of people in the poorest countries would fall.
4. DTrade between the poorest countries and the rest of the world would increase.

As printed in the paper