Which Statement Is True of a World with a System

question 275

Multiple Choice

Which statement is true of a world with a system of fixed exchange rates as opposed to one with floating rates?

• A)It requires less world liquidity or reserves.
• B)It creates less confidence about future values of currencies.
• C)It facilitates the transmission of shifts in economic conditions between countries.
• D)It increases the role of the central banks in foreign exchange markets.

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Definitions:

Voidable Title

A legal condition referring to a situation where a title or ownership can be invalidated at the discretion of one party due to certain conditions, such as fraud.

Void

A term applied to a contract that is not valid because its object is illegal or it has some defect that is so serious that it is not a contract.

CIF

Cost, Insurance, and Freight, a term used in international trade that indicates the seller is responsible for covering these expenses until the goods reach the purchaser's specified port of destination.

Cost

The value, usually in monetary terms, required to produce, acquire, or maintain a good or service.