The Proponents of Fixed Exchange Rates Argue That Flexible Exchange

question 59

Multiple Choice

The proponents of fixed exchange rates argue that flexible exchange rates

• A) hamper international trade because of uncertainty over what the exchange rate will be.
• B) force a nation to use its domestic macroeconomic policies to maintain an exchange rate.
• C) lead to trade protectionism.
• D) a and b
• E) a,b,and c

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Definitions:

Hedonist Principle

is the belief that pursuit of pleasure and avoidance of pain are the highest or most important goals of human life.

Might-Equals-Right Principle

A belief that power or strength justifies moral superiority or entitlement to leadership and decision-making.

Self-Serving Decisions

Decisions made with the primary objective of benefiting oneself, often at the expense of others or ethical standards.

Proximity

The physical closeness or distance between people, objects, or locations, often influencing communication, interaction, or relationships.