An exchange rate crisis is caused by
A) a sudden and an unexpected collapse in the value of a nation's currency.
B) the inability of the IMF to predict the immediate collapse of the currency of a country.
C) the adoption of a flexible exchange rate system by a country or group of countries.
D) the adoption of a fixed exchange rate system by a country or group of countries.
Question 2
Tijuana, Mexico is across the border from San Diego, California. It has become a world-leading producer and exporter of television sets and computer monitors, which it assembles in modern factories owned by multinational consumer electronics firms such as Sony. Initially, these electronics were produced in the industrialized countries of their parent companies, and after several years, the production moved to Tijuana. This is an example of
A) the product cycle.
B) intraindustry trade.
C) the specific factors model.
D) the magnification effect.
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Flexible exchange rates are supposed to prevent long-term trade deficits.