20a. From Vanity Fair April 2009 article on Iceland and its currency the Krona:

With local interest rates at 15.5 percent and the krona rising, they decided the smart thing to do, when they wanted to buy something they couldn't afford, was to borrow not kronur but yen and Swiss francs. They paid 3 percent interest on the yen and in the bargain made a bundle on the currency trade, as the krona kept rising.

If the kronur then crashes and people have large debts in foreign currencies, then their debts are ____ by the crash in terms of kronur.

1. decreased
2. held constant
3. increased

The following graph shows the Euro-Icelandic Krona ER. On the y-axis is the number of Krona it takes to buy one Euro.

EUR/ISK Exchange rates: Last 365 days (Frankfurt) 305 . 00007 261.9200 . . .. 216.8400-.... . . Exchange rate 175. 7500.. . .. . 132.5800.... . 89.5000- 02Jan 01Feb 03Har 01APP 02Hay 02Jun 01Jwl 01Aug 0152F 010ct 03Nou 01Dec Min=89.6 (13 Dec 2007) ; Max=305 (9 Oct 2008) TitiTudorancea.com / Frankfurt