Under a Fixed Exchange Rate System, If the Inflation Rate

question 67

Multiple Choice

Under a fixed exchange rate system, if the inflation rate in the United States is 5 percent a year and the inflation rate in Australia is 0 percent a year, then the U.S. real exchange rate will

• A) remain constant.
• B) increase 5 percent a year.
• C) decrease 5 percent a year.
• D) possibly increase or decrease.

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Definitions:

Mandamus

A judicial remedy in the form of an order from a court to a government official, body, or lower court, requiring them to perform a mandatory or purely ministerial duty correctly.

Natural Justice

The principle of fairness in legal processes, ensuring all parties have a fair chance to present their case.

Privative Clauses

Provisions in law that limit the ability of a court to review decisions made by administrative bodies, aiming to reduce judicial interference.

Fair Hearing

A judicial or administrative procedure that ensures an individual's rights are respected by giving them a chance to present their case and to hear and respond to any evidence against them.