Exchange Rate Changes Are

question 78

Multiple Choice

Exchange rate changes are

• A)very volatile because supply and demand changes reinforce each other.
• B)infrequent because the exchange rate rarely changes.
• C)very volatile because of government intervention in the market.
• D)not very volatile because of government intervention.
• E)not very volatile because of offsetting changes in demand and supply.

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Definitions:

Automatic Stabilizers

Economic policies and programs designed to offset fluctuations in a nation's economic activity without additional intervention by the government or policymakers, such as progressive taxes and unemployment benefits.

Real GDP

Stands for Real Gross Domestic Product, which measures the value of all final goods and services produced within a country in a given period, adjusted for inflation.

Keynesian Theory

An economic theory stating that government intervention through fiscal policy is necessary to manage the cyclical nature of economies and adjust to demand shocks.

Real GDP

An inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year, providing a more accurate picture of economic growth than nominal GDP.