After a Speculative Attack Has Been Successful, and the Country

question 48

Multiple Choice

After a speculative attack has been successful, and the country is forced to devalue its currency, it is common to see many local business firms driven to bankruptcy.This most commonly occurs because _____.

• A)nobody ever wants to invest in a country that just suffered a devaluation
• B)many local firms had foreign loans (denominated in, say, dollars), and they cannot repay them at the new exchange rate
• C)the WTO forces troubled firms to show profits or make way for new, more efficient firms
• D)local firms cannot compete with their foreign competitors at the new prices after the devaluation
• E)many local firms do not know how to deal with the complicated financial operations involved in a speculative attack

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Definitions:

Oscilloscope

An electronic instrument that visually displays varying signal voltages, usually as a two-dimensional graph of one or more signals as a function of time.

Action Potential

A rapid and temporary electrical charge that travels along the membrane of a neuron, signaling neuronal activity.

Single-Cell Recording

A neurophysiological technique for measuring the electrical activity of individual neurons in a living organism.

Electrode

A conductor through which electricity enters or leaves an object, substance, or region.