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 the above

Question

Quizplus · Accepted Answer

If the United States were to consistently engage in deficit spending, experience high inflation, and see its currency depreciate, this could erode confidence in the US dollar as a reserve currency. In such a scenario, other countries may turn to the SDR, which is a basket of currencies including the US dollar, as an alternative reserve currency. However, it is important to note that the adoption of the SDR as a reserve currency is not a simple or immediate process and would require significant coordination and agreement among international actors.

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