Under a Pegged Exchange-Rate System,which Does Not Explain Why a Country

question 145

Multiple Choice

Under a pegged exchange-rate system,which does not explain why a country would have a balance-of-payments deficit?

• A) Very high rates of inflation occur domestically
• B) Foreigners discriminate against domestic products
• C) Technological advance is superior abroad
• D) The domestic currency is undervalued relative to other currencies

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Definitions:

Not Rival

A characteristic of a good where its consumption by one individual does not reduce availability to others, often associated with non-rivalrous goods.

Club Good

A type of good that is excludable but non-rivalrous, meaning those who do not pay cannot access it, but one person's use does not diminish availability for others.

Common Resource

A resource like air or water that is not owned by anyone, is available for everyone to use, and is rivalrous but non-excludable.

Pennsylvania Turnpike

A toll highway in Pennsylvania, significant for its role in transportation infrastructure in the United States.