A Potential Disadvantage of Freely Floating Exchange Rates Is That

question 90

Multiple Choice

A potential disadvantage of freely floating exchange rates is that there would:

• A) Exist excessive amounts of hedging in the foreign exchange markets
• B) Be a lack of incentive to initiate exchange arbitrage
• C) Be excessive amounts of destabilizing speculation
• D) Exist a devaluation bias in the exchange markets

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Definitions:

Primary Reinforcer

A stimulus that satisfies a basic biological need, such as food or water, and is inherently rewarding.

Negative Reinforcement

Negative reinforcement is a type of operant conditioning that occurs when a response is strengthened by stopping, removing, or avoiding a negative outcome or aversive stimulus.

Punishment

The imposition of a penalty as retribution for an offense, with the aim of correcting behavior or serving as a deterrent to others.

Negative Reinforcement

A behavioral psychology concept where the removal of an unfavorable outcome or stimulus strengthens a desired behavior.