The Russian Ruble Crisis of 1998 Was a Complex Combination

question 1

Multiple Choice

The Russian Ruble crisis of 1998 was a complex combination of speculative pressures best explained by ________ to exchange rate determination.

• A) parity conditions approach
• B) asset approach
• C) balance of payments approach
• D) PPP approach

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Definitions:

U.S. Treasury

The government department responsible for managing federal finances, including issuing currency and managing public debt.

Securities

Financial instruments representing ownership (stocks), a debt agreement (bonds), or rights to ownership (derivatives).

Twin Deficits

The situation where a country has both a fiscal deficit (government spending exceeds revenue) and a current account deficit (imports exceed exports).

Interest Rates

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.