Suppose economic agents are increasingly concerned about the stability of Thailand's banking system. What is likely to happen in the Thai currency market?
A) The demand for bahts (Thailand' currency) will decrease.
B) The supply of bahts will decrease.
C) Both the demand and supply of bahts will decrease.
D) Both the demand and supply of bahts will increase.

Question

Quizplus · Accepted Answer

If economic agents are concerned about the stability of Thailand's banking system, they will be less likely to hold Thai bahts, which will lead to a decrease in demand for the currency. This decrease in demand will lead to a decrease in the value of the baht relative to other currencies.

Suppose Economic Agents Are Increasingly Concerned About the Stability of Thailand's