Question #33
Reading: Reading 5 Currency Exchange Rates - Understanding Equilibrium Value
PDF File: Reading 5 Currency Exchange Rates - Understanding Equilibrium Value.pdf
Page: 14
Status: Unattempted
Question
Which of the following is least likely a warning sign of an impending currency crisis?
Answer Choices:
A. Liberalized capital markets that allow for a free flow of capital
B. Terms of trade deteriorate
C. Money supply relative to bank reserves shrinks
Explanation
Warning sign of an impending currency crisis is when money supply relative to bank
reserves grows (not shrinks).