Currency crises are likely to be transmitted from one country to a second when:

Question

Quizplus · Accepted Answer

If investors expect the second country to devalue its currency, they may start to sell that currency, leading to a currency crisis. This can in turn affect the first country if it has economic ties or investments with the second country. Choice A may actually prevent transmission of a currency crisis, while choices B and D may only delay it or lessen its impact, but they are not necessarily determining factors.

Currency Crises Are Likely to Be Transmitted from One Country