Which of the Following Statements Is Correct with Respect to Flexible

question 12

Multiple Choice

Which of the following statements is correct with respect to flexible exchange rates?

• A)they insulate the domestic economy from external shocks much more than fixed exchange rates
• B)they are particularly attractive to nations subject to large external shocks
• C)they provide less stability to an open economy subject to large internal shocks
• D)all of the above

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Definitions:

Nation States

Political entities consisting of a clearly defined territory and population that is politically organized under a sovereign government.

International Organizations

Entities established by treaties between governments for purposes of conducting activities and fostering cooperation among member countries across borders.

International Agreements

Formal arrangements between two or more countries governed by international law, which can relate to trade, peace, cooperation, or other mutual interests.

Neoliberal Globalization

Refers to the process of accelerating economic integration, market deregulation, and diminishing state intervention across countries, pushed by neoliberal policies.