Which of the Following Economic Lessons Should We Take from Developing

question 77

Multiple Choice

Which of the following economic lessons should we take from developing country crises in Latin America (and elsewhere) ?

• A) only that it is important to choose the right exchange rate regime
• B) only that banking is of central importance in any government
• C) the order in which reform measures are implemented are irrelevant
• D) It is important to choose the right exchange rate regime and banking is of central importance in any government.
• E) The order in which reform measures are implemented are irrelevant and banking is of central importance in any government.

---

Definitions:

Semiannually

A term indicating that an event or action occurs twice a year.

Capital Gain

The profit earned from the sale of an asset when its selling price exceeds its purchase price.

High-duration

Describes bonds or other fixed-income securities that have high sensitivity to changes in interest rates, usually because they have a long time until maturity.

Low-duration

Refers to investments that have a short time until maturity, typically associated with lower interest rate risk.