A flexible exchange rate system crisis involves

Question

Quizplus · Accepted Answer

A flexible exchange rate system crisis involves a rapid and uncontrolled depreciation of the currency. In such a crisis, the exchange rate between a country's currency and other currencies can fluctuate rapidly, leading to a sharp decline in the value of the country's currency relative to other currencies. This can lead to a range of problems, including inflation, reduced foreign investment, and increased costs for imports. While a revaluation of the currency may be one response to a crisis, it is not necessarily a defining characteristic of such a crisis. Similarly, a decrease in the dollar value of a country's international debt may be a consequence of a currency crisis, but it is not necessarily a defining characteristic of such a crisis. Finally, while a political collapse may exacerbate a currency crisis or be a consequence of one, it is also not a defining characteristic of a flexible exchange rate system crisis.

A Flexible Exchange Rate System Crisis Involves