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How Can Irresponsible Fiscal Policy Contribute to a Speculative Attack

question 51

Essay

How can irresponsible fiscal policy contribute to a speculative attack on a country's currency that is fixed in value to another currency?


Definitions:

Cognitive Dissonance

The psychological discomfort experienced when holding two or more conflicting cognitions (ideas, beliefs, values, or emotional reactions).

Social Facilitation

The tendency for people to perform differently when in the presence of others, typically enhancing performance on well-practiced tasks.

Cognitive Dissonance

The mental discomfort experienced by an individual who holds contradictory beliefs, ideas, or values at the same time.

Conformity

The act of changing one's behavior to match the responses or norms of a group, often as a result of real or imagined group pressure.

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