Which of the Following Factors Make It Difficult for Emerging

question 25

Multiple Choice

Which of the following factors make it difficult for emerging market economies to choose a specific currency regime?

• A) weak fiscal, financial, and monetary institutions
• B) the tendency for commerce to allow currency substitution and the denomination of liabilities in dollars
• C) the emerging market's vulnerability to sudden stoppages of outside capital flows
• D) all of the above

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Definitions:

Direct Investments

Investments made directly into a company or project, rather than through securities, stocks, or other indirect means.

Terrorist Activity

Violent acts intended to create fear, perpetrated for a religious, political, or ideological goal, often targeting civilians.

Political Risk

The risk of losing money due to changes in a country's political environment or government policies that would affect investments negatively.

Transaction Gains

Refers to the profits realized from the buying and selling of assets or securities within a specific timeframe.