Why Did the European Currency Crisis of 1992 Occur

question 66

Multiple Choice

Why did the European currency crisis of 1992 occur?

• A)Germany raised its interest rates to combat inflation,which led investors to question whether other European countries would keep their currencies pegged to the Deutschemark.
• B)West and East Germany reunited after the Cold War ended,which led investors to question whether the country could support the Deutschemark,so they sold the currency and bought U.S.dollars.
• C)Sweden raised its interest rates to 500 percent to reduce inflation,which led investors to dump their other currencies and buy Swedish krona.
• D)A housing bubble collapsed in Italy,sparking a financial crisis throughout the region.

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