A Major Problem with Countries Setting Fixed Exchange Rates for Their

question 97

Multiple Choice

A major problem with countries setting fixed exchange rates for their currencies is

• A)Some participating countries are likely to experience continuing balance-of-payments deficits.
• B)The foreign exchange reserves of participating countries are likely to be depleted.
• C)Import and export prices will probably become more unstable.
• D)The fixed rate will have to be maintained by currency market intervention.

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Definitions:

Shock Or Surprise

An emotional or physical response to an unexpected event or piece of information.

Direct Approach

A communication style that is straightforward and to the point, without unnecessary details or digressions.

Negative Message

Communication that conveys a refusal, denial, or unfavorable information in a tactful way.

Positive Statement

An assertion that can be tested and validated, often used in economics to describe facts without judgment.