A Potential Limitation of Freely Floating Exchange Rates Is That

question 63

Multiple Choice

A potential limitation of freely floating exchange rates is that

• A) countries require a larger amount of international reserves than otherwise.
• B) countries are unable to initiate economic policies to combat unemployment.
• C) exchange rates may experience wide and frequent fluctuations.
• D) demand tends to be highly sensitive to price movements.

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Definitions:

Obsessive-Compulsive Disorder

A mental disorder characterized by intrusive thoughts (obsessions) and repetitive behaviors (compulsions) performed to alleviate anxiety.

Irresistible Urges

Compelling desires or impulses that are difficult to control or resist.

Thoughts

The mental process of considering, reasoning, or remembering; cognitive units that form the contents of the mind.

Behaviors

Observable actions or responses of an organism or system.