A country which does not devalue when financial markets expect it to will probably suffer:
A) a housing bubble.
B) a real appreciation of its currency.
C) higher interest rates.
D) a default on its national debt.
E) lower unemployment.

Question

Quizplus · Accepted Answer

When financial markets expect a devaluation and it does not occur, the country may need to raise interest rates to defend its currency and maintain investor confidence.

A Country Which Does Not Devalue When Financial Markets Expect