Multiple Choice
Why might a default crisis be associated with an exchange rate crisis?
A) A large depreciation causes a sudden decrease in the local currency value of international debts denominated in other currencies.
B) A government is unable to pay principal or interest on debt owed to banks.
C) A large depreciation causes a sudden increase in the local currency value of international debts denominated in other currencies.
D) Banks close or declare bankruptcy.
Correct Answer:
Verified
Correct Answer:
Verified
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