If an International Currency Speculator Expects That Country a Will

question 62

Multiple Choice

If an international currency speculator expects that country A will soon be forced to devalue its currency,the speculator will

• A) buy as much of that currency as possible.
• B) sell all of his holdings of that currency.
• C) not be concerned because the devaluation will affect only the domestic prices of goods within country A's borders,not international prices.
• D) not be concerned because only a revaluation will affect his or her profits.

---

Definitions:

Consumer Goods

Goods that are produced for direct consumption by the end user.

Capital Goods

Long-term assets purchased by businesses to produce goods and services.

Production Possibility Frontier

A curve depicting all maximum output possibilities for two or more goods given a set of inputs (resources), assuming all resources are fully utilized.

Opportunity Costs

The penalty of overlooking the next most advantageous option when a choice is made.