Question

which of the following economic lessons should we take from developing country crises in latin america (and elsewhere)? a. only that it is important to choose the right exchange rate regime b. only that banking is of central importance in any government c. the order in which reform measures are implemented are irrelevant d. it is important to choose the right exchange rate regime and banking is of central importance in any government. e. the order in which reform measures are implemented are irrelevant and banking is of central importance in any government.

Answer 1

The economic lesson that we can take from developing country crises in Latin America (and elsewhere) is that it is important to choose the right exchange rate regime and banking is of central importance in any government.

Step-by-step explanation:

The economic lesson that we can take from developing country crises in Latin America (and elsewhere) is that it is important to choose the right exchange rate regime and banking is of central importance in any government.

Exchange rate regimes determine the value of a country's currency relative to other currencies. Choosing the right exchange rate regime can help stabilize the economy and prevent excessive fluctuations in the exchange rate, which can disrupt international trade and contribute to economic crises.

Similarly, banking plays a critical role in any government by facilitating transactions, making loans to firms and consumers, and maintaining financial stability. When banks in a country become bankrupt, it can lead to a decline in aggregate demand and a deep recession. Therefore, having a strong and stable banking system is crucial for any government.