Based on the Premise That, Other Things Equal, Countries Would

question 54

Multiple Choice

Based on the premise that, other things equal, countries would prefer a fixed exchange rate, which of the following statements is NOT true?

• A) Fixed rates provide stability in international prices for the conduct of trade.
• B) Fixed exchange rate regimes necessitate that central banks maintain large quantities of international reserves for use in the occasional defense of the fixed rate.
• C) Fixed rates are inherently inflationary in that they require the country to follow loose monetary and fiscal policies.
• D) Stable prices aid in the growth of international trade and lessen exchange rate risks for businesses.

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Definitions:

Serum

The clear, yellowish fluid that remains from blood plasma after clotting factors have been removed, used in diagnostic tests and treatments.

Lymphedema

Swelling typically in one of the arms or legs due to a blockage in the lymphatic system, preventing lymph fluid from draining well.

-edema

A suffix used in medical terminology to denote swelling or an accumulation of fluid in the tissues.

Leukocytes

White blood cells that are part of the immune system and defend the body against both infectious disease and foreign materials.