Currency speculation is _____ if speculators bet against market forces that cause exchange fluctuations, thus moderating such fluctuations ?
Correct answer: B. stabilizing
- A. destabilizing
- B. stabilizing
- C. inflationary
- D. deflationary
Explanation
Speculation is stabilizing when traders bet against a currency movement, selling when its price is rising excessively and buying when it is falling. These actions reduce, rather than amplify, exchange-rate fluctuations.
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