The Expectation of Future Devaluation Causes a Balance of Payments

question 28

Multiple Choice

The expectation of future devaluation causes a balance of payments crisis marked by

• A) a sharp rise in reserves and a fall in the home interest rate below the world interest rate.
• B) a sharp fall in reserves and an even bigger fall in the home interest rate below the world interest rate.
• C) a sharp fall in reserves and a rise in the home interest rate above the world interest rate.
• D) a sharp rise in reserves and an even greater rise in the home interest rate above the world interest.
• E) a sharp rise in reserves and a rise in the home interest rate to the level of the world interest.

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Definitions:

Fear Of Women

Also known as gynophobia, it is an irrational and persistent fear of women.

Claustrophobia

Claustrophobia is an anxiety disorder characterized by an irrational fear of enclosed or narrow spaces.

Hypochondriasis

A disorder characterized by excessive worry and preoccupation with having a serious illness despite medical reassurance.

Adenohypophysis

The anterior, glandular part of the pituitary gland responsible for the release of hormones.