When Carry Trade Speculation Grows to High Levels, It Can

question 77

Multiple Choice

When carry trade speculation grows to high levels, it can affect the economy. How?

• A) It is a stabilizing factor.
• B) It can be a destabilizing factor, causing large swings in exchange rates.
• C) It creates large differentials in income distribution in emerging markets.
• D) Inflation is always a problem when carry trade activity increases.

---

Definitions:

Overcome

To successfully deal with or gain control of something difficult, such as obstacles, challenges, or conditions.

Lithium

A mood-stabilizing drug commonly used in the treatment of bipolar disorder and other mood disorders.

Antidepressant Effects

The therapeutic outcomes achieved from the use of medications or interventions designed to alleviate symptoms of depression.

Eysenck

Refers to Hans Eysenck, a psychologist who developed theories related to personality and its biological basis.