Advocates of Floating Rates Pointed Out That

question 29

Multiple Choice

Advocates of floating rates pointed out that

• A) removal of the obligation to peg currency values would restore monetary control to central banks.
• B) imposing of the obligation to peg currency values would restore monetary control to central banks.
• C) removing of the obligation to peg currency values would restore fiscal control.
• D) imposing of the obligation to peg currency values would restore fiscal control.
• E) imposing of the obligation to peg currency would restore monetary control to the consumer.

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Definitions:

Fiscal Policy

Government policies regarding taxation and spending that are used to influence economic conditions, including stimulating or restraining economic growth.

Potential GDP

The highest level of Gross Domestic Product (GDP) an economy can sustain over a long period without increasing inflation, reflecting its full employment output.

Inflation

A widespread rise in prices and a decrease in the value of money.

Spending Multiplier

A concept in Keynesian economics that quantifies the effect of an increase in autonomous spending on the total economic output.