Many Large Developing Countries with Large Dollar-Denominated External Liabilities Experienced

question 19

Multiple Choice

Many large developing countries with large dollar-denominated external liabilities experienced large depreciations of their currencies between 1990 and 2003. What effects, if any, did these depreciations have on these countries' external wealth and their GDPs?

• A) Both their external wealth and their GDPs fell.
• B) Their external wealth fell and their GDPs rose.
• C) Their external wealth rose and their GDPs fell.
• D) The depreciations reduced their external wealth but had no effect on their GDPs.

---

Definitions:

Beneficial

Resulting in a good outcome or advantage.

Government Intervene

Actions taken by a government to influence or directly manage an economy or specific markets, often aiming to correct market failures, redistribute resources, or stabilize the economy.

Market

A place or mechanism where buyers and sellers interact to trade goods, services, or assets, determining prices through supply and demand.

Money Supply

The entirety of cash, coins, and checking and savings account balances that make up the financial assets in an economy at a specific point in time.