Adopting the special drawing right (SDR) as a reserve currency might possibly occur if the United States was to operate continuous bad economic policy in the form of
A) deficit spending.
B) high inflation.
C) currency depreciation.
D) All of these are correct.

Question

Quizplus · Accepted Answer

All of these factors can contribute to a loss of confidence in the US dollar as a reserve currency, leading to a possible shift towards alternative reserve currencies such as the SDR. Deficit spending and high inflation can lead to a decrease in the value of the dollar relative to other currencies, while currency depreciation can result in a loss of confidence in the stability of the currency as a store of value.

Adopting the Special Drawing Right (SDR) as a Reserve Currency