After a Speculative Attack Has Been Successful, and a Country

question 84

Multiple Choice

After a speculative attack has been successful, and a country is forced to devalue its currency, it is common to see many local business firms driven to bankruptcy. This most commonly occurs because _____.

• A) nobody ever wants to invest in a country that just suffered a devaluation
• B) many local firms took foreign loans (denominated in, say, dollars), and they cannot repay them at the new exchange rate
• C) the WTO forces troubled firms to show profits or make way for new, more efficient firms
• D) local firms cannot compete with their foreign competitors at the new prices after the devaluation
• E) many local firms do not know how to deal with the complicated financial operations involved in a speculative attack

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Definitions:

Core Brand

The central, defining elements of a brand that shapes its identity and perception among consumers.

Luxury Brands

Brands that offer products or services perceived to be of high quality, exclusivity, and status, often accompanied by a premium price.

Brand Personality Destruction

The detriment or adverse alteration of a brand's perceived characteristics and identity, often caused by negative events, scandals, or poor marketing decisions.

Consumer Loyalty

The ongoing preference of a customer to buy a particular brand or product over competitors, often reflected in repeat purchases.