Some European nations have experienced a debt crisis. What caused this crisis?

A

Unscrupulous national leaders embezzled money from the treasuries of some European countries.

B

Too many recent immigrants in some nations have drained these countries’ resources.

C

The interest rate on bonds dropped so low during times of economic austerity that some nations could not earn enough interest on money they lent to investors.

D

During times of economic prosperity, some nations borrowed more money than they can pay back now in times of economic hardship.

In the 2000s, Europe went through a financial crisis that was mainly due to fiscal problems. In periods of bonanza, before the crisis, some countries, among them Portugal, Ireland, Italy, Greece and Spain, spent more money than they were able to collect with taxes. To finance themselves, these countries started to accumulate debts. This caused a serious crisis in the Eurozone, which was almost extinct. A recovery program of austere nature was implemented with the International Monetary Fund, causing many conflicts between the population and the Government, mainly in Greece. At present the situation is better, but Europe has not yet fully recovered, embittering low economic growth rates.

scouteo scouteo · Answer 2 · 2019-11-04T10:36:34-05:00

The correct answer is D) During times of economic prosperity, some nations borrowed more money than they can pay back now in times of economic hardship.

Some European nations have experienced a debt crisis. The cause of the crisis was that during times of economic prosperity, some nations borrowed more money than they can pay back now in times of economic hardship.

Some European governments thought that borrowing money was the best solution to the problems they have at the moment. But the problem was not to borrow but to pay the debt and interests. That was the case of European countries such as Greece or Spain, which caused severe problems in their countries and instability in European markets to the degree that the European Union. led by Germany, had to take action.