Which of the following is an implication of a currency crisis?
A)It occurs due to a sharp appreciation in the value of a currency.
B)It forces authorities to block large volumes of international currency reserves.
C)A country in currency crisis is not eligible for loans from the International Monetary Fund.
D)It results in the government sharply increasing interest rates to defend the prevailing exchange rate.
E)A country in currency crisis faces sharp decreases in stock and property prices.

Question

Quizplus · Accepted Answer

During a currency crisis, the government may increase interest rates to defend the exchange rate and prevent further depreciation of the currency.

Answer: B 
 During a currency crisis, authorities may need to block large volumes of international currency reserves to support the value of the currency and prevent further depreciation.

Answer: E 
 A currency crisis can lead to a decrease in stock and property prices as investors lose confidence in the economy and withdraw their investments.

Therefore, the best choices are D, B, and E.

Which of the Following Is an Implication of a Currency