Which of the Following Statements Is Not True of Fixed

question 28

Multiple Choice

Which of the following statements is not true of fixed and flexible exchange rate systems?

• A)Under fixed exchange rates, government officials have little direct role in the foreign exchange market.
• B)Under fixed exchange rates, the government must select an appropriate exchange rate.
• C)Under fixed exchange rates, active central bank intervention is necessary to maintain the fixed exchange rate.
• D)Under fixed exchange rates, the governments must stand ready to buy all foreign exchange offered to it and supply all foreign exchange demanded from it.
• E)Flexible exchange rates rely on market forces to set the exchange rate, but fixed exchange rates are set by central banks.

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Definitions:

Profit And Loss Statement

A financial statement that summarizes the revenues, costs, and expenses incurred during a specific period of time, usually a fiscal quarter or year.

Income Statement

A financial document that reports a company’s revenues and expenses over a specific period, ultimately showing the net profit or loss.

Bundled Pricing

A pricing strategy whereby companies package a set of goods or services together and then sell them for a lower price than if they were to be sold separately.

Lower Price

A pricing strategy involving setting a cost below the average market price to attract customers or gain market share.