The Difference Between a Fixed and a Floating Exchange Rate

question 307

Multiple Choice

The difference between a fixed and a floating exchange rate regime is that with a _____ rate system, the _____, whereas with a _____ rate system it does not.

• A) fixed; central bank retains its ability to use independent monetary policy; floating
• B) floating; central bank retains its ability to use independent monetary policy; fixed
• C) fixed; government can use independent fiscal policy; floating
• D) floating; government can use independent fiscal policy; fixed

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Definitions:

Chi-Square

A statistical test used to determine if there's a significant association between two categorical variables.

Row Variable

A variable whose values are presented in rows within a table or matrix, often used in data analysis to compare categories horizontally.

Column Variable

A variable in data represented by columns in a table, often used in statistical analyses to differentiate groups or conditions.

Critical Value

A threshold value that defines the boundary of the critical region, where if the test statistic exceeds this value, the null hypothesis is rejected.