Question

1. A speculative attack on a currency occurs when:

a. a central bank switches from a floating to a fixed exchange rate.
b. investors' perceptions change, making a fixed exchange rate untenable.
c. a country accepts dollarization.
d. a central bank adopts a currency board to back the domestic currency with a foreign currency.

Answer 1

B. Investors´ perceptions change, making a fixed exchange rate untenable.

Step-by-step explanation:

A speculative attack happens when a lot of untrustworthy assets are sold by many investors and with that sale, they buy valuable assets.

In currency, it occurs when the national currency is sold massively and suddenly by national and foreign investors. These types of speculative attacks are seen especially on currencies that use a fixed exchange rate. They have the value of it tightened to a foreign currency.

I hope this answer helps you.