One Argument for a Fixed Exchange Rate System Is That

question 65

Multiple Choice

One argument for a fixed exchange rate system is that

• A) governments can contract their money supply without worrying about the need to maintain parity.
• B) trade balance adjustments do not require the intervention of the International Monetary Fund.
• C) it ensures that governments do not expand the monetary supply too rapidly, thus causing high price inflation.
• D) speculations in exchange rates boost exports and reduce imports.
• E) each country should be allowed to choose its own inflation rate.

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Definitions:

Inflation

The pace at which prices for general goods and services climb, reducing the value of money to buy them.

Spreadsheets

Digital tools or applications used to organize, analyze, and store data in tables, often utilized for accounting, planning, and data analysis.

Household Budget

An estimate of an individual's or family's income and expenses over a specified period, used for managing personal finances.

Economic Theory

A set of principles and concepts used to explain how economies operate and to make predictions about economic behaviors and outcomes.