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According to the passage, one problem that likely precipitated the 1980s crisis was:investors' reactions to disappointing financial information.a shortage of available government funding.a collapse of the state’s role in economics.the first major defection from the IRP.

User Tybstar
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2 Answers

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Final answer:

The 1980s crisis was likely precipitated by short-term portfolio investments in government bonds that made countries vulnerable to investor reactions to disappointing financial information.

Step-by-step explanation:

According to the passage, one problem that likely precipitated the 1980s crisis was a short-term portfolio investment in government bonds, rather than long-term investments in physical capital by firms. The passage suggests that governments were dealing with high levels of foreign financial investment which, coupled with high budget and trade deficits, created a precarious situation. This situation led to a susceptibility to the reactions of investors to disappointing financial information, which could trigger an outflow of those short-term investments, much like an avalanche is triggered by a few falling rocks.

User VenkateshJN
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3 votes

Answer:

Meow

Step-by-step explanation:

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User Alister Bulman
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