Which of the Following Is a Benefit of a fiXed

question 29

Multiple Choice

Which of the following is a benefit of a fixed exchange rate regime?

• A) Fixed exchange rates can have a strong disciplinary effect on domestic inflation.
• B) Countries that have a fixed exchange rate have a higher level of GDP than countries that
• C) Fixed exchange rates allow a gradual adjustment in the value of the exchange rate.
• D) Under fixed exchange rate regimes, the balance of payments always equals zero.

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Definitions:

Anti-inflation Policy

A set of governmental or central bank strategies aimed at controlling or reducing the rate of inflation in the economy.

Expectations

The anticipations or beliefs about future events or outcomes, which can influence current behavior and decision-making.

Price of Oil

The cost per barrel of crude oil as determined in global markets, influenced by factors such as supply, demand, geopolitical events, and market speculation.

Unemployment

Is the condition of someone actively looking for employment but unable to find work, often used as a key economic indicator.