Question #37
Reading: Reading 5 Currency Exchange Rates - Understanding Equilibrium Value
PDF File: Reading 5 Currency Exchange Rates - Understanding Equilibrium Value.pdf
Page: 15
Status: Unattempted
Correct Answer: B
Question
Which of the following is least likely a warning sign of an impending currency crisis?
Answer Choices:
A. Official foreign exchange reserves decline dramatically
B. Currency value is substantially higher than the mean-reverting level
C. Floating exchange rates
Explanation
Warning sign of an impending currency crisis is when exchange rates are fixed or partially
fixed (and not floating).