Which of the Following Mechanisms Cannot Be Adopted by a Country

question 11

Multiple Choice

Which of the following mechanisms cannot be adopted by a country to defend a fixed exchange rate?

• A)The government can buy or sell foreign currency in order to influence the actual exchange rate.
• B)The government can allow the currency to self-adjust and the resulting market rate will be equal to the intended rate in the fixed exchange rate regime.
• C)The government can impose a form of exchange control.
• D)The government can alter domestic interest rates in order to influence short-term capital flows.

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Definitions:

Behaviors

Actions or reactions of an individual or group in response to external or internal stimuli.

Transference

In psychotherapy, the process by which emotions and desires originally associated with one person are unconsciously shifted to another person.

Social Worker

A professional dedicated to helping individuals, families, and communities to cope with challenges and improve their well-being.

Past Experiences

Events or occurrences from an individual's life history that influence their present thinking, behavior, and emotional responses.