The tendency of investors to withdraw portfolio capital from an entire region in response to perceived economic difficulties in a single country or subset of countries is known as:
A) crawling peg
B) exchange rate regime
C) intervention
D) contagion
E) Bretton Woods system

Question

Quizplus · Accepted Answer

The described phenomenon is known as contagion, where investors fear that economic problems in one country may spread to neighboring countries or the entire region, leading to a widespread withdrawal of portfolio capital. The other options are not relevant to this scenario - crawling peg refers to a type of exchange rate regime, intervention involves a government or central bank's actions in the foreign exchange markets, and the Bretton Woods system was an international monetary agreement in place from 1944 to 1971.

The Tendency of Investors to Withdraw Portfolio Capital from an Entire