Which One of the Following Statements Is TRUE

question 2

Multiple Choice

Which one of the following statements is TRUE?

• A) The less extensive are cross-border trade and factor movements, the greater is the gain from a fixed cross-border exchange rate.
• B) The more extensive are cross-border trade and factor movements, the greater is the loss from a fixed cross-border exchange rate.
• C) The more extensive are cross-border trade and factor movements, the greater is the gain from a fixed cross-border exchange rate.
• D) The more extensive are cross-border trade, the greater is the loss from a fixed cross-border exchange rate.
• E) The more extensive are factor movements, the greater is the loss from a fixed cross-border exchange rate.

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Definitions:

Quantity of Money

The total amount of money available in the economy, comprising various forms of currency and bank deposits.

Value of Money

The purchasing power of money, which can decrease over time due to inflation.

Money Demand Curve

A graphical representation showing the relationship between the quantity of money people want to hold and the interest rate.

Fed

The central banking system in the United States, known as the Federal Reserve System, is tasked with overseeing monetary policy.