The Theory That Changes in the Exchange Rate Reflect Only

question 197

Multiple Choice

The theory that changes in the exchange rate reflect only changes in the price levels of two countries is called

• A)the floating exchange rate theory
• B)the fixed exchange rate theory
• C)the flexible exchange rate theory
• D)purchasing power parity
• E)the managed exchange rate theory

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Definitions:

Bulk Sales Acts

Laws designed to protect creditors by regulating the bulk transfer of business assets outside the regular course of business.

Holdback Money

Funds retained by a party in a contract to ensure obligations are met before making full payment.

Privity of Contract

The principle that a contract cannot confer rights or impose obligations arising under it on any person or agent except the parties to it.

Doctrine of Privity

A legal principle stating that contracts are binding only upon the parties signing them, and no third-party can enforce or be obligated by the contract.