In a Fixed Exchange Rate System

question 81

Multiple Choice

In a fixed exchange rate system,

• A)Excess demand for a currency is eliminated by using foreign exchange reserves to increase demand.
• B)A country can eliminate a surplus of its currency by eliminating its protectionist barriers to trade.
• C)The capital account surpluses must offset current account deficits.
• D)A balance-of-payments deficit can be corrected by expansionary fiscal and expansionary monetary policies.

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Definitions:

Anagrams

A game or puzzle in which players create new words by changing the order of letters in the original word.

Infinite Creativity

The concept that creative potential and imagination have no limits or boundaries.

Displacement

A defense mechanism in which a person redirects a negative emotion from its original source to a less threatening recipient.

Semanticity

Semanticity refers to the quality of language by which it conveys meaning through the use of symbols and words.