When Other Emerging Market Nations Experience an Exchange Rate Crisis

question 11

Multiple Choice

When other emerging market nations experience an exchange rate crisis, it affects healthy emerging market economies (raises risk premiums) because of investor worry. This phenomenon is known as:

• A) emerging market dysfunction.
• B) the law of like outcomes.
• C) experiential judgment.
• D) contagion.

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Definitions:

Trade Agreement

A negotiated pact between two or more nations that outlines the rules for trade between them, often aiming to reduce tariffs and other barriers to import and export.

Tariffs

denote taxes or duties imposed by governments on imported or, less commonly, exported goods, intended to control trade flows, protect domestic industries, or raise revenue.

Barriers

Impediments, obstacles, or hindrances that prevent progress or make achievement difficult in various contexts.

European Unification

The process of political, economic, and social integration among European states, exemplified by the formation of the European Union.