​The Interest Rate of a Country with a Currency Board

question 69

Multiple Choice

​The interest rate of a country with a currency board:

• A) ​is less stable than it would be without a currency board.
• B) ​is typically below the interest rate of the currency to which it is tied.
• C) ​will move in tandem with the interest rate of the currency to which it is tied.
• D) ​is completely independent of the interest rate of the currency to which it is tied.

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Definitions:

Positive Economics

The branch of economic analysis that describes the way the economy actually works.

Production Possibility Frontier

A visual map outlying the highest possible production levels for two goods, considering a defined compilation of resources and other relevant factors.

Minimum Quantity

The smallest amount of a product that can be ordered or purchased at one time.

Gain From Trade

The advantage or improvement in outcome that countries or individuals achieve through the act of trading goods or services.