Question 115

Almost all the major economies of the world had reacted sharply on the issue of the USA's ceiling limit on its debt. Why was the issue so important for other nations, which otherwise was an internal matter for the USA? (This was during the month of July 2011, till Senate's decision.) (A)The Senate's decision on the issue might have caused the US dollar to weaken further or get strengthened in international markets. (B) Weakening of the dollar might have pushed up Euro and other major currencies up and some European countries which were already in trouble would have faced a new crisis. (C) Debt limit was directly related to liquidity position of banks in USA.

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