If a country's central bank eventually runs out of international reserves,it cannot keep its currency from ________ and a ________ must occur in which the par exchange value is reset at a ________ level.

Question

Quizplus · Accepted Answer

If a country's central bank runs out of international reserves, it cannot maintain the value of its currency and it will start to depreciate. Therefore, a devaluation must occur, which means that the central bank intentionally lowers the currency's value by reseting the par exchange value at a lower level. So, the correct option is C, which states that the currency will depreciate, a devaluation will occur, and it will be reset at a lower level.

If a Country's Central Bank Eventually Runs Out of International