What Is a Speculative Attack on a Currency

question 31

Multiple Choice

What is a speculative attack on a currency?

• A)National governments decide to engage in competitive devaluations against a given country.
• B)International organizations such as the WTO and the IMF attempt to reorder the currency's system.
• C)Private investors sell domestic currency and buy foreign currency, betting that the domestic currency will soon be devaluated.
• D)Casinos in Las Vegas allow the proliferation of bets for and against a given currency.
• E)A country is at war, and the enemy country "freezes" all the accounts denominated in the local currency.

---

Definitions:

Monopolistically Competitive

Refers to a market structure where many firms sell similar but not identical products, allowing for some degree of market power and product differentiation.

Advertising

The action or profession of producing advertisements for commercial products or services.

Monopolistically Competitive

A market structure characterized by many sellers offering similar but not identical products, leading to competitive pricing and product differentiation.

Economic Profit

The net financial outcome for a company after all explicit and implicit costs are taken from its overall earnings.