In a Fixed Exchange Rate System

question 83

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.

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Definitions:

Crystallized Intelligence

The ability to use learned knowledge and experience effectively.

Primary Mental Abilities

Fundamental skills and cognitive functions such as reasoning, memory, and perception that are considered essential for intelligence.

Inductive Reasoning

A rational procedure where several assumed or generally true statements are merged together to derive a particular outcome.

Word Fluency

The ability to rapidly retrieve words from memory, often tested by asking individuals to produce as many words as possible from a category in a limited time.