A Capital ________ Can Promote Financial Instability in an Emerging-Market

question 8

Multiple Choice

A capital ________ can promote financial instability in an emerging-market country because it can lead to a lending boom and excessive risk-taking on the part of banks,which helps trigger a ________.

• A)inflow;financial crisis
• B)inflow;currency devaluation
• C)outflow;financial crisis
• D)outflow;currency devaluation

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Definitions:

Present Value

The contemporary valuation of a future amount of money or cash flow sequence, based on an identified rate of return.

Corporate Profits Tax

A tax imposed by governments on the income of corporations, differentiating from personal income taxes.

Ceteris Paribus

A Latin phrase that means "all other things being equal," used in economics to isolate the effect of one variable changes while holding others constant.

Investment

Allocating financial assets or resources in the hope of receiving future income or profit.