A Potential Limitation of Freely Floating Exchange Rates Is That

question 97

Multiple Choice

A potential limitation of freely floating exchange rates is that:

• A) Countries require a larger amount of international reserves than otherwise
• B) Countries are unable to initiate economic policies to combat unemployment
• C) Exchange rates may experience wide and frequent fluctuations
• D) Demand tends to be highly sensitive to price movements

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Definitions:

Constant Rate

A fixed rate at which something occurs or is applied over a particular period of time.

Producing

The process of creating goods or services through the combination of labor, materials, and machinery to meet consumer demand.

Coolers

Devices or containers used to keep items cold or chilled.

Radios

Electronic devices used for receiving sound broadcasts from radio stations, enabling listening to music, news, and other audio content.