Question

2 during times of financial crisis, governments may not be able to repay bond holders in a timely manner.
true
false

Explanation:

Analyze the statement

During a severe financial crisis, a government's tax revenues typically decline while its debt obligations remain high. This fiscal pressure can lead to a situation where the government lacks the liquidity or solvency to meet its debt obligations, resulting in delayed payments or a sovereign default.

Evaluate the options

Because governments can and do occasionally default or restructure their debt during extreme crises (such as Greece in 2012 or Argentina in 2001), it is true that they may not be able to repay bondholders in a timely manner.

Answer:

• True (Correct answer)
• False