One May Predict the Timing of a Crisis by Analyzing

question 84

Multiple Choice

One may predict the timing of a crisis by analyzing the expectations of investors with respect to:

• A) the tendency of the central bank to monetize debt.
• B) the health of the economy, especially unemployment and GDP.
• C) the long-run current account deficit.
• D) the credentials of bank officials and their previous experience handling currency crises.

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Definitions:

Expected Value

The mean of all potential outcomes of a random variable, adjusted according to their individual probabilities of occurrence.

Dipstick

A tool used for measuring the quantity of a liquid in a tank or container, commonly used for checking oil levels in engines.

Sealed-Bid

A bidding process where all bids are submitted confidentially to the auctioneer with no bidder knowing how much others have bid.

Lemons

In the context of economics, refers to products of lower quality that are difficult to distinguish from higher quality products before purchase. In a general context, it's a citrus fruit.