With Floating Exchange Rates, the Effects of International Trade Shocks

question 34

Multiple Choice

With floating exchange rates, the effects of international trade shocks on internal balance are _____ by the effects of the resulting change in the _____.

• A)not mitigated; LM curve.
• B)not mitigated; exchange rate.
• C)mitigated; LM curve.
• D)mitigated; exchange rate.

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Definitions:

Special Privileges

Exceptional rights, advantages, or immunities granted to individuals or groups, often beyond what is common.

Deviance

Occurs when someone departs from a norm and evokes a negative reaction from others.

Norm-breaking

Refers to actions or behaviors that deviate from widely accepted social norms or standards.

Sanctions

Measures taken by countries or international bodies to restrict trade, financial transactions, or other economic relations to enforce policies or punish.