7. Signs of a currency crisis

The following table describes economic conditions in two countries, Lavia and Lovenia. Complete the table by indicating for each country whether the risk of a currency crisis is high or low. Country Condition 1 Condition 2 Lovenia The stock market and export growth are rising, whereas the The central bank coordinates the interest rate with the unemployment rate is falling. prevailing interest rates in major international currencies. Lavia The central bank increasingly nances the budget deficit by The financial system was recently deregulated. creating money